(Bloomberg) — Chinese regulators imposed wide-ranging restrictions on the fast-growing financial divisions of 13 companies including Tencent Holdings Ltd. and ByteDance Ltd., leveling many of the same curbs employed against Jack Ma’s Ant Group Co. in a crackdown on the tech sector.
Units of JD.com Inc., Meituan and Didi were also among firms summoned to a meeting with several watchdogs including the central bank, which spelled out a raft of requirements including stricter compliance when listing abroad and curbs on information monopolies and the gathering of personal data. Companies must restructure their financial wings into holding companies as part of a broad effort to subject themselves to more rigorous supervision, and sever “improper links” between their existing payments services and financial products, the central bank, banking and insurance regulator, securities regulator and the forex regulator said in a joint statement Thursday.
Representatives for Tencent, ByteDance, JD, Meituan and Didi didn’t immediately respond to requests for comment.
China has waged a campaign to rein in its internet titans as the government grew increasingly concerned over their growing influence over every aspect of Chinese life as well as the vast amounts of data they’ve amassed through providing services like online shopping, chatting and ride-hailing. The crackdown has already forced Ma’s Ant Group to scrap its initial public offering while regulators have levied a record fine against affiliate Alibaba Group Holding Ltd.
“Nobody can escape the tough regulatory crackdown on fintech,” said Zhang Xiaoxi, a Beijing-based analyst at Gavekal Dragonomics. “While the requirements are broadly in line with those imposed on Ant, those who are considering listing need to wait till they rectify all the problems.”
It’s unclear how long the companies have to enact changes, or how it would affect their core operations. Companies like Meituan, JD and Tencent rely on their payments operations to drive their core operations in e-commerce, gaming and social media. Some, like ByteDance and Didi, are said to be exploring overseas initial public offerings and the new regulations may impose a stricter oversight of the process.
The firms were also ordered to break up their information monopoly and to conduct personal credit reporting services through licensed agencies. They should strengthen their capital structure and compliance, strictly implement regulatory requirements and step up consumer protection mechanisms, according to the statement. Baidu Inc., Trip.com Group Ltd. and Lufax Holding Ltd. were among others summoned to the meeting.
Regulators have pledged to curb the “reckless push” of technology firms into finance and this month outlined an overhaul of Ant, which will drastically revamp its business and be supervised more like a bank. The overhaul meant Ant will have to cut off any improper linking of payments with other financial products including its Jiebei and Huabei lending services.
Ant said it will fold those units into its consumer finance arm, apply for a license for personal credit reporting, and improve consumer data protection.
Read more: Ant to Be Financial Holding Firm in Overhaul Forced by China
Earlier this year, China proposed measures to curb market concentration in online payments, which Ant and Tencent have transformed with their ubiquitous mobile apps that are used by a combined 1 billion people. The central bank said in draft rules that any non-bank payment company with half of the market in online transactions or two entities with a combined two-thirds share could be subject to antitrust probes.
If a monopoly is confirmed, the central bank can suggest that the cabinet impose restrictive measures including breaking up the entity by its business type.
(Updates with other firms summoned to the meeting in seventh paragraph)
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