Alibaba Group Holding Ltd (NYSE: BABA) and Ant Group are separating their operations, and each will seek new business independently as the firms navigate a devastating regulatory crackdown in China, according to four sources familiar with the matter.

Alibaba still controls 33% of Ant Group

Alibaba Group Holding, the leading Chinese e-commerce marketplace, founded Ant Group, a financial and payment services supplier, and spun it in 2011. Despite this, Alibaba still has a 33 percent share in Ant, and the two businesses’ management teams occasionally overlap.

However, as they work to rebuild from a broad tech industry crackdown that has reduced their value by hundreds of billions in dollars, decreased their sales, and resulted in a record-breaking $2.8 billion penalty for Alibaba, the pair has started to unravel some of their cooperative agreements.

The affiliates have begun limiting access to the other’s offerings, competing for customers, and forming alliances with competitors. According to the four sources, they sought anonymity as they were not allowed to talk to the media. These actions would’ve been unimaginable two years ago.

When preparing to make an unprecedented $37B initial public offering (IPO), Ant emphasized the firm’s tight connections as a key selling feature. However, Beijing abruptly canceled the flotation in late 2020.

Alibaba and Ant Group operating independently 

As per two of the people, it is now emphasizing its autonomy from Alibaba, particularly as it grows internationally, and Alibaba is developing a cross-border payment tool that might rival Ant.

In the year ending in March 2022, Alibaba’s platforms saw over $1.3 trillion in gross merchandise value (GMV) created by its over 1.3 billion yearly users. Additionally, it operates a variety of other ventures, including cloud services, video streaming, and trip bookings. In addition, ant. runs Alipay, a popular mobile payment application with over 1 billion active users in China.

Alibaba Group, which previously represented corporate might in the international arena, is now the darling of Chinese innovation, with its platforms posting more than double the GMV of American counterpart Amazon for the fiscal 2021 year.