China's central bank wants Jack Ma's Ant Group to overhaul its business model

• Jack Ma's Ant Group has reportedly been asked to 'rectify' the services that it offers by the People's Bank of China.
• According to China's apex financial institution, the Ant Group needs to overhaul its business model.
• The central bank's comments for the Ant Group come within days of an antitrust probe being launched against another one of Jack Ma's businesses — Alibaba.

China's central bank has asked billionaire Jack Ma's financial behemoth, the Ant Group. To 'rectify' its services over the weekend.

According to Bloomberg, the company has been asked to 'return to its roots' as a payment services provider at a time when the 17-year old company is at the peak of its expansion. It was planning to go public, and was poised to be the largest IPO of all time — but regulators intervened.

The People's Bank of China asserts that Ma's enterprise needs to 'understand the necessity of overhauling its business' before the Ant Group can move forward. The apex bank is critical of the company for ignoring the basics of corporate governance, flouting regulatory requirements and possibly engaging in regulatory arbitrage.

The Ant Group, in response, has stated that it will set up a 'special team' to create a proposal and a timetable to overhaul its operations. The company communicated that will maintain business operations for users and keep costs for consumers and financial partners unchanged while stepping up risk control.

Last week, an antitrust probe was launched against the Ant-affiliated Alibaba to determine whether the Ant Group has been using its dominant position in the market to push out the competition, which in turn may have impacted the interests of millions of customers.

China is rethinking the Jack Ma model
This is not the first time Jack Ma's business has been in hot water with Chinese regulators. Five years ago, Alibaba Group Holding was accused of selling counterfeit goods over the interest — a claim which Ma vehemently fought against. The investigation results were openly challenged and Alibaba even filed a formal complaint against the person in-charge of the probe.

The report was eventually retracted and it may seem like Ma's defence worked. However, experts opine that the government only hit the breaks because the probe was just a few months after Alibaba got listed on the New York Stock Exchange (NYSE).

Six years later, China has established itself in the international order and isn't as forgiving of tech companies — and their CEOs — going against regulatory norms.

The strategy which was once fueling China's growing internet economy on the international stage may well be the same one stifling growth at home. The lack of competition and too much power in the hands of alleged monopolies like the Ant Group and Alibaba — which China was uniquely tolerant of in past years — may not be leaving any room for smaller players to grow.

Over the last one month, China has rolled out several new policies to regulate the conduct of internet companies across different sectors of the economy, with a particular focus on finance and media.

Many of the new rules now focus on anti-competitive practices, overmarketing on live streaming platforms, and the illegal collection of user data from mobile apps.

China's new regulations also don't restrict the definition of a 'monopoly' to market share. Any action that is deemed to hinder consumer interests could be actionable.

The whirlwind of new rules may have been triggered by bad blood between Ma and the Chinese government after he publicly criticised the country's financial regulatory system, but their implications are going to hit far and beyond.

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