Alibaba CEO Says Rules to Control Chinese Fintech Space Are Necessary

Daniel Zhang, the CEO of Alibaba Group Holding Ltd (NYSE: BABA), in a World Internet Conference held at Wuzhen declared his support for the draft released by the Chinese regulators to curb internet giants and check their monopolistic behavior in the fintech market. The regulator’s decision recently caused the Ant Group‘s IPO led by the Alibaba Group to cease operation 48 hours before the scheduled event.

The CEO of Alibaba Group has, despite the criticisms and complaints, commended the effort claiming it’s timely and necessary.

According to Zhang, government regulations have empowered Chinese internet giants to move ahead of the global industry. However, there is a need for regulations to change. Speaking at the event, Zhang stated that the relationship between development and government supervision is very important as it promotes internet companies to depend on each other and also extend the benefits of their sustainability and healthy development to the whole society instead of developing alone.

Recently, the Chinese regulators subjected the likes of Tencent Holdings Limited (OTC: TCEHY), Meituan (OTC: MPNGF), and Alibaba Group under critical scrutiny. The drafted rules will severely check the operation of the Alibaba e-commerce website based on the supposed defined rules for internet companies.

The Ant Group IPO could have raised about $37 billion to become the world’s largest according to the Vice President of Fosun Technology and Financial Group, Liu Qiang. The decision by regulators to suspend the IPO was said to be due to the prevention of entrepreneurs to be out of their lane in addition to financial stability. For this reason, the founder of Alibaba Group, Jack Ma, and some executives have been ordered to appear before the regulators for questioning.

Fintech Rules to Control Alibaba Group and Others

The draft prepared by the States Administration for Market Regulation (SAMR) is meant to properly supervise internet companies especially the well-established ones from preventing others from growing through several foul strategies. The draft defines an anti-competitive behavior of the fintech market. In this case, companies that use foul ways to push other businesses into exclusive arrangements would be cracked down.

Regulators will also check internet companies that discriminate or treat customers differently after monitoring their spending habits and data usage.

Some companies have over the years adopted strategies of teaming up with others to push out smaller businesses from the market. Some also share the sensitive data of customers with others getting rid of rivals by selling at loss. These are some of the behaviors of internet companies that would be strictly checked as the likes of Alibaba have been accused of pushing enterprises into an exclusive arrangement.

The new rules to put internet giants to check would soon be probably adopted by other countries as this concern has already been raised against the likes of Google LLC (NASDAQ: GOOGL) and Amazon.com Inc (NASDAQ: AMZN). Amazon was accused by the European Union of stepping beyond their boundaries to abuse their market power in some selected countries.