U.S.-listed shares of Alibaba (BABA) fell Friday amidst a report that the Chinese government was pressuring the company to distance itself from founder Jack Ma and was planning to impose penalties on the tech giant.
Among the penalties being considered are a record fine of more than $975 million imposed by China's antitrust regulators for alleged abuse of Alibaba's dominant market position, according to unnamed sources cited by the Wall Street Journal.
Shares of Alibaba were falling 3.8% to $231.66 at last check.
According to officials cited in the report, Alibaba needs to reduce ties with founder Jack Ma and end practices that pressure some sellers to operate only on its platforms.
"Regulators don’t want to crush a technology powerhouse popular with both Chinese households and global investors -- as long as it disassociates itself from its flashy and outspoken founder and aligns itself more closely with the Communist Party," according to the Journal report
China’s regulatory crackdown on internet titan Alibaba and its affiliate Ant Financial Group started late last year when the Chinese President Xi Jinping personally decided to halt the initial public offering of Ant Group, which Alibaba owns a 33% stake in. Chief Executive Simon Hu resigned from Ant Financial on Friday citing personal reasons, and will be replaced by current Executive Chairman Eric Jing.
Regulators are considering a breakup of Alibaba, including the divestiture of assets unrelated to its main online-retailing business, the Journal's report said.
None of the measures under consideration would come close to crippling the company, which reported $20 billion in net income in its most recent fiscal year.
Separately on Friday, China’s State Administration for Market Regulation fined a dozen local tech companies, including Tencent Holdings and Baidu (BIDU) , for improperly reporting past investment deals, as reported by the Journal.