(Bloomberg) – The Chinese government wants Alibaba Group Holding Ltd. Some of its media assets, including the South China Morning Post, have to sell due to growing concerns about the influence of the technology giant over public opinion in the country, according to an acquaintance with the case.
Beijing has expressed reservations about Alibaba’s media holdings during several meetings dating back to last year, saying the person asked not to be identified because the discussions were private. Government officials are particularly upset about the company’s influence on social media in China and its role in an online scandal involving one of the executives.
Jack Ma, co-founder of Alibaba, was at the center of a government crackdown that began last year, targeting e-commerce giant and its financial subsidiary Ant Group Co. The Wall Street Journal previously reported that the Chinese government is asking Alibaba to shed media properties.
Over the years, Ma and Alibaba have built up an extensive portfolio of media assets, distributing BuzzFeed-style online stores, newspapers, television production businesses, social media and advertising assets. Alibaba has a major stake in Twitter-like Weibo, as well as other online and print news outlets, including the SCMP, the leading English-language newspaper in Hong Kong.
The conversation about selling the newspaper started last year, the person said. Although no specific buyer has been identified, it is expected to be a Chinese entity.
Bloomberg News reported in February that Beijing had become concerned about Alibaba’s media ownership following a scandal involving Jiang Fan, then the youngest partner in the e-commerce business. Reports of the scandal began to disappear from social media, including Weibo, which angered government officials.
The Internet watchdog from China has penalized the microblogging site for interfering with the dissemination of opinions. The person familiar with the matter said at the time that the extent and speed with which the site had removed posts exceeded government officials, who regarded it as a streak.
“The country must pay attention to this and strike against it, because the power of capital can be used by us, but also by the enemy,” wrote Chinese commentator Song Qinghui, who contributes editorials to publications, including state-sponsored media.
Regulators were shocked by the extent of the company’s media interests after reviewing their interest and asked them to come up with a plan to substantially curtail the interests, the Journal reported, referring to people familiar with the discussions.
Beijing is concerned that Alibaba could use its media assets as a tool to control public opinion and create a “vicious circle”, the person said. The media has already played a role in influencing the general public on the emerging fintech sector, the person said.
Weibo shares fell 2.4% in US trade, while Alibaba’s US shares changed little.
The expansion is seen as serious challenges for the Chinese Communist Party and its powerful propaganda apparatus, the Journal said.
Representatives of Alibaba in China and the US did not respond to requests for comment.
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These comments sparked an unprecedented regulatory outburst, including plans for Ant’s $ 35 billion initial public offering and the opening of an antitrust investigation into Alibaba. His media ownership can be even more problematic.
China’s campaign to curb the influence of its technological powers expanded last week with fines against Pony Ma’s conglomerate Tencent Holdings Ltd. Top financial regulators see Tencent as the next target for greater oversight after combating Ant, reports Bloomberg.
It is not clear whether Alibaba will have to sell all its media assets, reports the Journal. According to the newspaper, any plan that Alibaba comes up with needs approval from China’s senior leadership.
(Updates with shares in the 11th paragraph)
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