|FROM ||Ruben Safir
|SUBJECT ||Subject: [Hangout - NYLXS] Where are you putting your healthcare data ?
Is having an Dossier of every US citizen a national security concern?
WSJ News Exclusive | Chinese Regulators Try to Get Jack Ma’s Ant Group
to Share Consumer Data
China’s regulators are trying to get Jack Ma to do something the
beleaguered billionaire has long resisted: share the troves of
consumer-credit data collected by his financial-technology behemoth.
Mr. Ma has little room to bargain after the business empire he has built
over decades has landed in the crosshairs of regulators and even
President Xi Jinping, partly reflecting Beijing’s concern that the
flamboyant entrepreneur has been too focused on his business fortunes
rather than the state’s goal of controlling financial risks.
Central to the crackdown on Ant Group Co., in which Mr. Ma is the
controlling shareholder, is what regulators view as the unfair
competitive advantage the company has over small lenders or even big
banks through swaths of personal data harnessed from its payment and
lifestyle app Alipay.
The app, used by more than a billion people, has voluminous data on
consumers’ spending habits, borrowing behaviors and bill- and
Equipped with that information, Ant has originated loans to half a
billion people and has gotten about 100 commercial banks to supply the
majority of the funding. In those arrangements, banks take on most of
the risk of borrowers’ defaulting, while Ant pockets profits as the
Employees at work at Ant Group in Hangzhou, China, in October.
Photo: aly song/Reuters
Now, authorities are seeking to overturn that business model, which has
proved lucrative for the company but which comes with potential dangers
for the country’s financial system.
Not only are authorities set to regulate Ant’s lending business like a
bank, which would cause it to supply more of its own funds when making
loans, they are also planning to break what they see as the company’s
monopoly over data, according to officials and government advisers with
knowledge of the regulatory matter.
Ant declined to comment.
One plan being considered would require Ant to feed its data into a
nationwide credit-reporting system run by the central bank, the People’s
Bank of China, the people familiar with the matter say. Another option
would be for Ant to share such information with a credit-rating company
that is effectively controlled by the central bank.
Jack Ma in the Crosshairs
Despite Ant being a shareholder in the credit-rating company, along with
seven other big data-driven Chinese firms, it hasn’t handed over its
data, the people say.
“How to regulate data monopolies is at the heart of the issue here,”
said an adviser to the antitrust committee of China’s State Council, the
top government body.
In the U.S., lawmakers have also stepped up efforts to crack down on Big
Tech, arguing that companies such as Facebook Inc. and Google have used
vast amounts of data to muscle out rivals. The tech giants have all
Some analysts of China’s financial-technology sector agree that it is in
the public interest to have companies like Ant share consumer-credit
data. It is unclear, though, whether regulators would demand access to
its entire database, including proprietary information that Ant uses to
analyze its customers’ creditworthiness.
How Ant’s Record IPO Plans Unraveled
0:00 / 3:28
How Ant’s Record IPO Plans Unraveled
How Ant’s Record IPO Plans Unraveled
Days before Chinese fintech giant Ant Group was scheduled to go public
in what would have been the world’s largest listing, regulators put
plans on hold. WSJ’s Quentin Webb explains the sudden turn of events and
what the IPO suspension means for Ant's future. Photo: Aly Song/Reuters
(Originally published Nov. 5, 2020)
“Making credit histories and scores more public is a good thing,” said
Martin Chorzempa, a research fellow at the Peterson Institute for
International Economics who is writing a book about the fintech sector
in China. “It can help make lending more competitive and prevent
For years, China’s financial regulators, led by the central bank, have
striven to build a credit-scoring system similar to FICO scores in the
U.S., created by Fair Isaac Corp. , as a way to make it easier for
lenders throughout China to assess credit risks and expand access to
financing for companies and individuals alike. The effort is part of a
broader “digital governance” initiative aimed at harnessing data and
technology in asserting greater social and economic control.
Mr. Ma, perhaps the Chinese entrepreneur most identified with innovation
in recent decades, has assisted the government in various ways over the
years. Alibaba Group Holding Ltd. , the e-commerce giant he co-founded
in 1999, has used its data sources to help authorities hunt down
criminal suspects and silence dissent. Ant’s Alipay payment app contains
contact-tracing functions to help the government contain the coronavirus
But in the past couple of years, Mr. Ma has resisted regulatory attempts
to make more available the personal credit data owned by Ant, according
to the officials and government advisers familiar with the issue.
In 2015, Ant started its own credit-scoring system, called Zhima Credit,
which assigned ratings to many individuals and small businesses that
didn’t have established credit histories elsewhere.
Three years later, the People’s Bank of China launched a personal-credit
reporting company, called Baihang Credit, and invited Mr. Ma’s Ant,
Tencent Holdings Ltd. , which owns the popular WeChat messaging app and
its associated mobile-payments network, and six other firms to be
Baihang Credit’s minority shareholders. The controlling owner is the
National Internet Finance Association overseen by the central bank.
The idea was to get Ant and others to share their customer-credit data,
which then would be accessible by financial institutions across the country.
However, the plan all but failed. Ant refused to contribute what it
views as its proprietary data to maintain its competitiveness, the
officials and advisers say. Zhima Credit’s ambitions, meanwhile, were
scaled back, and the Ant unit now is essentially a loyalty program,
giving individuals with high credit scores perks like deposit waivers on
rentals of cellphone chargers, bicycles and cars.
Mr. Ma himself has become engulfed in a regulatory storm in recent
months. A public speech he made in late October, in which he lashed out
at President Xi’s signature campaign to combat financial risks as well
as at financial regulators, infuriated the leadership and prompted Mr.
Xi to personally call off a much-anticipated share sale by Ant,
according to Chinese officials with knowledge of the matter, and order
regulators to investigate risks posed by his business.
Since then, regulators have used the clampdown on Mr. Ma and his empire
as part of a bigger effort to strengthen supervision of the country’s
increasingly influential tech sphere.
In a private meeting with regulators in early November, Mr. Ma himself
also offered to have the government “take any parts Ant has, as long as
the country needs it,” according to people with knowledge of the matter.
In late December, the central bank laid out a road map for Ant to
restructure its business, requiring, among other things, that the
company be fully licensed to operate its personal credit business.
In a statement issued by the People’s Bank of China, Deputy Gov. Pan
Gongsheng also criticized the company broadly for its “defiance of
Mr. Ma hasn’t appeared publicly since his October speech. Ant in recent
weeks has scaled back parts of its operations, reducing credit limits
for some individual borrowers and removing online-deposit products that
financial regulators have frowned upon.
—Xie Yu contributed to this article.
Write to Lingling Wei at lingling.wei-at-wsj.com
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