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Why regulators sidelined Ant Financial’s record-setting IPO

November 3, 2020, 6:00 PM UTC

If there was any doubt about who calls the shots in China, the matter was just put to rest.

Chinese regulators have slammed the brakes on the mammoth-sized initial public offering of Ant Financial, the banking unit of ecommerce giant Alibaba. The company, known for its ubiquitous Alipay app, was slated to go public on the Hong Kong and Shanghai stock exchanges on Thursday in what would have been a record-setting $35 billion debut. The now-halted event would have been the biggest public share sale of all time.

What went wrong? Officially, the Shanghai stock exchange suspended the impending listing, nebulously citing “changes in the financial technology regulatory environment and other major issues,” per a statement. After receiving the notice, Ant Group, reading the writing on the wall, pulled the plug on its Hong Kong listing.

Executives at Ant were clearly surprised by the sudden suspension. In a brief statement of its own, the company apologized for the “inconvenience” and said it would “keep in close communications” with regulators while waiting for “further notice.”

China’s fast-rising tech giants have long butted heads with the creaky establishment. Their upstart mentality jars against the stability-minded status quo enshrined in China’s state-owned banks. As I wrote in a feature about China’s digital currency plans earlier this year, the People’s Bank of China has continually foisted new rules and regulations onto the digital set for years.

Beijing and China’s brightest businesses are apparently having trouble seeing eye to eye. At a conference last week, Jack Ma, Alibaba’s founder and Asia’s richest man, spoke out against the incumbent banking system, comparing its institutions to stingy pawnshops. The comments appear to have rubbed authorities the wrong way. (Shocker!) Within a week, regulators called Ma and his team in for interviews and slapped the fintech industry (read: Ant) with stricter capital requirements and restrictions on lending.

Compare Ma’s words with those of Chinese Vice President Wang Qishan, who spoke at the same event. “There should be a fine balance between encouraging financial innovation, invigorating the market, opening up the financial sector and building regulatory capacity,” he said. He added that “safety always comes first.”

To reset that fine balance, regulators are now applying their fingers to the scales.

Robert Hackett

Twitter: @rhhackett

robert.hackett@fortune.com

THREATS

Vote! Really, go do it. Go! Today is election day in the U.S.

Shelved. Walmart's five-year engagement with startup Bossa Nova Robotics came to an end after the retail giant realized humans can scan and stock shelves just as cost effectively as aisle-trawling robots. Bossa Nova, a Carnegie Mellon University spinout, said it laid off half its workers as a result. The Wall Street Journal, which broke the story, noted that Walmart's U.S. boss, John Furner, also had "concerns about how shoppers react to seeing a robot working in a store." 

The droids you are looking for. Don't count the robots out. British online grocer Ocado is acquiring two U.S.-based robotics startups: warehouse robot-maker Kindred Systems for $262 million and robotic arm-maker Haddington Dynamics for $25 million. Shares in Ocado, known for its automated fulfillment centers, have effectively doubled in price since the start of the year to $64 per share as demand for online food delivery soared amid the pandemic.

Shopping spree. More deals: Coupa, a firm that makes business spending-software, is buying Llamasoft, a supply chain-planning, for $1.5 billion. And Bloomberg reports that Microsoft is planning to join a $100 million investment round in Indonesia's Bukalapak, an online marketplace.

Freebird. Twitter chief executive Jack Dorsey appears safe in his role at the top of the microblogging site—at least for now. A board committee tasked with reviewing Dorsey's leadership recommended keeping him in the role after Elliott Management, a fearsome activist investor, took a stake in the spring. User growth was up 23% since the fourth quarter of 2019, although that figure slipped since, as the company said in its earnings report this week.

Apple cores. Apple is hosting yet another virtual product event, its third of the year (not including the software-focused WWDC). Following its debut of new Apple Watches and iPhones this fall, Apple is expected to show off Macintosh computer chips of its own make on Nov. 10. The company is ditching chip-designer Intel, severing a relationship that has been in place since 2006.

"The needle" is back.

ACCESS GRANTED

Artificial intelligence tools are designed by humans, and it's humans who get to decide how and when to use them. Why then, asks Meredith Whittaker, a research scientist at New York University who formerly worked for Google, do people whose lives are most affected by such tools have the least say in their governance and regulation? Her words in the Boston Globe

Even as evidence of artificial intelligence’s unevenly distributed harms and benefits mount, the question of when it is appropriate to allow algorithms to make important decisions persists. Often, the people asked this question are people like me: those who have expertise in technology, and are employed in privileged positions in industry and academia. Left unasked and unanswered is another fundamental query: Who should get to answer this question, and on what basis?

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ONE MORE THING

Researchers at X, formerly Google X, Alphabet's so-called moonshot factory, spent three years hunting for a telltale biomarker for depression. Project Amber failed, the search giant revealed on Monday. If it had succeeded, the discovery would have enabled health care professionals to more easily and objectively diagnose and treat mental illnesses.

The scientists involved have made their data and tools available for other people to use. I have a hunch that, whichever way this week's presidential election swings, there will be plenty of resurgent interest in depression research.