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Jack Ma, founder of Ant Group, will relinquish control

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One of China’s most influential fintech companies, Ant Group, said on Saturday that billionaire businessman Jack Ma planned to relinquish control of the company.

Ma’s withdrawal from the company he founded comes after the ruling Communist Party undertook an unprecedented crackdown on Big Tech. Beijing has made Ma’s Ant Group and its sister company, e-commerce giant Alibaba, the crown jewels of its online empire, initial targets in the campaign to contain the power of the internet giants.

Chinese authorities forced Ant Group to cancel what would have been a wildly successful initial public offering in 2020, and subsequently fined Alibaba a hefty $2.8 billion for abusing its dominance. Last year, Ant Group said it would undertake a major government-ordered review of its business to address regulators’ concerns about unfair competition and the amount of data it collects about users.

Under Xi Jinping, China’s top leader, Beijing has sought to exert greater state control over the economy in recent years, including reining in the influence of tycoons who have amassed enormous wealth but have been seen to overstep their bounds.

Ma was once hailed in China as a successful role model, but he has faced increasing problems with the Chinese government, especially after he criticized the country’s banking regulators in late 2019. In recent years, he has largely disappeared from public view.

Ant Group said in a Saturday announcement that Ma would no longer be the “controlling person” who owns 34 percent of the company’s shares. Instead, he would be a top 10 shareholder.

The announcement, which described the change as part of a “corporate governance streamlining” plan, gave no details on when the changes would be finalized and noted that they would not affect the company’s day-to-day operations. Under Ant Group’s current governance structure, Mr. Ma does not have a management role.

Ant’s flagship Alipay app is a key gateway for more than 1 billion users in China, who use it to pay for meals, shop on credit and increase their savings. But its influence and size have made it a focus of concern for Beijing as officials scrutinize the fintech industry for potential risks to the country’s broader financial system. Then, in 2020, just before Ant went public, regulators abruptly halted its initial public offering, estimated at the time to be worth $34 billion, which would have been the largest IPO on record.

It was not immediately clear how Ma’s withdrawal from Ant Group might affect any plans the fintech may have to resume its initial public offering. But it will likely be delayed due to listing requirements. The Hong Kong Stock Exchange requires a one-year waiting period after a change of ownership; other markets require two or three years.

Ant Group has been working to restructure its companies in line with the requirements of the Chinese authorities. Last month, regulators approved a $1.5 billion capital increase plan for its consumer lending unit, allowing an arm of the Hangzhou government to become its second-largest shareholder. The capital increase overcomes a major regulatory hurdle, allowing it to issue up to 500 billion yuan, or $73 billion, in consumer loans.

The approval was the latest indicator that the Chinese government is ready to loosen its hardline stance on internet companies in an effort to boost economic activity in 2023.

After a prolonged period of strict “covid zero” lockdowns and strict fines and regulations at Ant Group and other tech giants, Li Qiang, the Communist Party’s new No. 2 official, urged cadres at an economic meeting in December to “develop vigorously the digital economy” and improve its global competitiveness.

Zixu Wang contributed research.