The Chinese government wants Alibaba Group Holding Ltd. sold some of their media assets, including the South China Morning Post, amid growing concerns about the tech giant’s influence on public opinion in the country, according to a person familiar with the matter.
Beijing raised concerns about Alibaba’s media holdings at several meetings last year, the person said, asking not to be identified as the discussions were private. Government officials are particularly upset about the company’s social media impact in China and its role in an online scandal involving one of its executives.
Jack Ma, co-founder of Alibaba, was at the center of a government crackdown that began last year and targeted the e-commerce giant and its finance company Ant Group Co. The Wall Street Journal previously reported that the Chinese government is calling on Alibaba to abandon media properties.
Ma and Alibaba have quietly built an extensive portfolio of media assets over the years, spanning BuzzFeed-style online outlets, newspapers, television production companies, social media, and promotional materials. Alibaba is heavily involved in Twitter-like Weibo and Youku, one of China’s largest streaming services, as well as other online and print news outlets, including SCMP, the leading English language newspaper in Hong Kong.
The discussion about selling the newspaper started last year, the person said. Although no specific buyer has been identified, it is expected to be a Chinese company.
“Please rest assured that Alibaba’s commitment to SCMP remains unchanged and continues to support our mission and business goals,” said Gary Liu, chief executive officer of the newspaper company, in an internal memo reviewed by Bloomberg News.
Alibaba representatives in China and the United States did not respond to requests for comment.
Bloomberg News reported in February that Beijing had become alarmed about Alibaba’s media holdings following a scandal with Jiang Fan, the e-commerce company’s youngest partner. Posts about the scandal disappeared from social media, including Weibo, and drew the wrath of government officials.
China’s internet watchdog fined the microblogging site for interfering with the dissemination of opinions. The extent and the speed with which the site removed posts ranked government officials who viewed it as a border crossing, said a person familiar with the matter at the time.
“The country must pay attention to it and act against it, because the power of capital can be harnessed by us, but also by the enemy,” wrote Chinese commentator Song Qinghui, who writes editorial for publications including state-sponsored media.
Regulators were shocked at the level of media interest in the company after reviewing its holdings and asked it to come up with a plan to cut interests significantly, the Journal reported, citing people familiar with the discussions.
Beijing fears that Alibaba may use its media resources as a tool to control public opinion and create a “vicious circle,” the person said. The company’s media had already played a role in influencing the general public about the emerging fintech sector.
Weibo stocks fell 2.4 percent in US trading, while Alibaba’s Hong Kong stocks were little changed. The online media company 36kr Holdings Inc. fell 1.5 percent in New York.
The expansive influence of the media services backed by Alibaba is seen as a serious challenge to the Chinese Communist Party and its powerful propaganda machine.
Ma is revered in China as one of the country’s most successful entrepreneurs. But his fortunes have plummeted since he spoke out against China’s regulatory approach to the financial sector.
Those comments sparked an unprecedented regulatory offensive, including sinking Ant’s $ 35 billion IPO plans and opening an antitrust investigation in Alibaba. Its media holdings could prove to be even more problematic.
China’s campaign to curb the influence of its tech moguls was fined last week against Pony Ma’s conglomerate Tencent Holdings Ltd. expanded. According to Bloomberg, leading financial regulators see Tencent as the next target for increased oversight after the crackdown on Ant.
It’s not clear whether Alibaba needs to sell all of its media assets, the Journal reported. Any plan that Alibaba puts forward must be approved by China’s top leadership, according to the newspaper.