When is BigTech too Big? Ant Group may have the answer to that.
After anticipating its IPO and setting share prices in late October, the China-based tech giant’s plans were put on hold when Chinese regulators suspended the IPO.
At $34.5 billion, Ant’s IPO would have been the largest public offering to-date, surpassing the previous highest IPO set when oil company Saudi Aramco went public at $29.4 billion earlier this year.
So what is China’s qualm with a successful tech giant going public? The answer may lie in fintech’s favorite four-letter word: data. That’s because big fintechs such as Ant rely on data traditionally held by the Chinese government such as salary and debt levels to provide lending or credit services. Overall, the communist party is worried about losing centralized control by giving a large tech company control over valuable data.
Some also speculate that the suspended IPO was directed at Jack Ma, Ant Group’s controlling shareholder and founder of tech giant Alibaba, as a way to humble him. Just before the IPO was suspended, Ma had given a speech at a conference in which he criticized regulators and Chinese banks.
“What happened to Ant reinforces that sense that it’s really essential to show respect for party-state authority,” said Kellee S. Tsai, the dean of the School of Humanities and Social Science at the Hong Kong University of Science and Technology told the New York Times. “Capitalists have to play by the political rules of the game.”
It’s a stark contrast to the scene in the U.S., where the economy relies so heavily on large companies in key industries that the government is willing to shell out millions to bail them out. In either situation, however, Ant Group’s recent predicament has taught us that it’s important to remember who’s boss.