Even as the regulatory crackdown on the Chinese tech companies by Beijing is not yet over, the Chinese regulator has announced sweeping changes in the country’s biggest payment app Alipay.
Alipay-with more than one billion users in China and other Asian nations including India has been ordered to spin off its profitable microloan business. Currently, the app allows users to pay with a traditional credit card linked to their bank or offers small unsecured loans to buy anything from toilet paper to laptops.
“The government believes big tech’s monopoly power comes from their control of data,” which the Chinese government looks to end. Alipay’s parent company Ant Group is China’s biggest payments services provider.
Earlier in November last year, the company faced major regulatory issues following the fintech conglomerate’s record $37 billion stock market launch after company founder Jack Ma criticized government officials.
Ma’s business empire has been targeted in a wider crackdown on tech firms aimed at breaking monopolies and strengthening data security, which has wiped billions off companies’ valuations. The outspoken billionaire has largely remained out of the limelight since the crackdown began.
After separating its payment and loan businesses Alipay will have to hand over customer data used to make its lending decisions to a new credit scoring joint-venture that is partly state-owned.
China’s market regulator last month announced rules to bring down so-called ‘walled gardens’ built by tech companies that aim to lock users into their services.