Jack Ma's Conflict With the Chinese Government Costs Billionaire's Alibaba, Ant More Than $1.14 Trillion

Billionaire Jack Ma's conflict with the Chinese government has cost the businessman's companies, Alibaba and Ant, more than $1.14 trillion.

On Friday, Beijing authorities said they would finish an investigation into Ant, as the financial technology company was fined nearly $1 billion. The probe started after Ma criticized Beijing's regulation of the financial sector in 2020, which forced Ant to pull the plug on what could have been the largest initial public offering (IPO) in history.

Jack Ma's Conflict With The Chinese Government

The costs that Ma's companies incurred go far beyond just the latest fine as the crackdown also added to the erosion of confidence in the private sector in China as the Asian country is suffering from a growing weakness from a range of issues, such as consumer spending, the housing market, to investments in exports and infrastructure.

Furthermore, Ant was forced to overhaul its entire business model, promptly pulling back from sensitive sectors and choosing to ease up on competition with state-backed banks. The company's valuation, estimated to be about $315 billion following the IPO, has dropped to roughly $78.5 billion, as per the Straits Times.

Ant also proposed on Saturday to buy back as much as 7.6% of shares in an attempt to provide a chance to cut stakes for investors who were ensnared by a years-long regulatory crackdown. On the other hand, Ma's other company, Alibaba, was considering whether or not to offer up some of its shares with Ant to the buyback, said company officials on Sunday in an exchange filing.

Alibaba was not any better compared to Ant as Chinese President Xi Jinping's administration targeted the company in a crackdown on leading internet platforms. Earlier this year, Alibaba officials planned to split the company into six major businesses.

Even after an 8% rally in shares on Friday, Alibaba's market value was $234 billion after the probe on Ant. This was a massive drop compared to its previous $620 billion estimation, off its peak in 2020.

The Communist Party boss at the People's Bank of China, Guo Shuqing, said in January that the Chinese government's crackdown was essentially over. He noted that it was meant to boost economic growth, jobs, and the nation's competitiveness abroad, according to CNN.

Crackdown on the Private Sector

China's financial regulators also announced a nearly $415 million fine for Tenpay, Tencent's (TCEHY) online payment platform. It was seen as part of the Chinese government's broader attempt to curb the nation's private enterprise, which the ruling Communist Party has deemed has become too powerful.

The situation comes after Ma was thought to have gone missing after being out of the public eye for several months. But in 2021, it was reported that the billionaire entrepreneur was lying low amid the flurry of new, restrictive regulations.

On Thursday, Alibaba said Ma was "alive" and "happy" after continued speculation regarding his activities. The remarks were made by the company's President, Michael Evans, which were made in response to a question regarding the billionaire's condition. CNBC said the statement underscored the continued interest in Ma's whereabouts recently.