China launches antimonopoly investigation by e-commerce giant Alibaba

China has launched an antimonopoly investigation into Alibaba, regulators said Thursday, raising further pressure on the e-commerce giant and sending its stock price tumble.

Regulators will also hold “monitoring and guidance” talks with Alibaba’s giant financial subsidiary Ant Group, state media reported, just weeks after its last-minute record launch was stopped by Beijing.

The move shows increasing government pressure on one of the country’s most influential companies, whose success revolutionized the e-commerce landscape and made founder Jack Ma China’s richest man.

Investigators are investigating Alibaba for “suspected monopolistic practices,” the State Administration for Market Regulation said in a statement.

Alibaba shares tumbled 5.48 percent in the news shortly after the Hong Kong Stock Exchange opened on Thursday morning.

The subsidiary Ant Group for financial services said in a statement that it would “carefully study and strictly follow the authorities’ wishes”.

Ant Group made its name through its main product Alipay, the online payment platform and the super app that is now deeply embedded in China’s economy.

But the company has also expanded to offer loans, credit, investment and insurance to hundreds of millions of consumers and small businesses, spurring fear and jealousy in a broader banking system that is more focused on supporting government policies and large corporations.

As global demand for the Hong Kong-Shanghai double listing pushed the IPO to record valuations – possibly giving Ma and Ant Group even more funding, legitimacy and influence – Chinese regulators acted.

The outspoken and charismatic Ma had previously cracked down on China’s outdated financial system, calling state-owned banks “pawn shops” in a speech in October that led to him being called to regulatory talks just before the Ant Stock Exchange was lifted.

This year, Beijing has also implemented new rules to contain potential risks in China’s growing online lending industry, as fintech arms from Internet companies including Alibaba and Tencent have expanded and consolidated power over the market.

State media have repeatedly called for stricter supervision of these companies and warn of potential financial instability due to their unregulated rapid growth.

“This is an important measure for our country to strengthen the supervision of monopolies in the Internet sector, which contributes to … promoting the long-term and healthy development of the platform economy,” said a Thursday comment in the state’s mouthpiece People’s Daily.

Bad debt in China’s chaotic financial system is a constant risk, and regulators launched a vigorous intervention against a growing nationwide credit dependency three years ago for fear of a financial collapse.