China’s JD.com has sold its cloud and artificial intelligence businesses valued at a combined 15.7 billion yuan ($2.4 billion) to its fintech unit JD Digits, as it doubles down on its core ecommerce business to take on archrivals including Alibaba and Pinduoduo.
After the transaction, JD.com increased its equity interest in JD Digits to 42% by buying the latter’s ordinary shares, according to its filing to the U.S. Securities and Exchange Commission on Wednesday.
The plan was originally announced in December last year, when JD.com said that the spin-off would help JD Digits to deliver a suite of cutting-edge technology services to its business partners while it would continue to focus on its “core competences” and “synergistic businesses” to better serve customers.
Wednesday’s announcement came amid the Chinese government tightening its crackdown on monopolistic practices on the internet, and in the areas of ecommerce and fintech. The crackdown was a major factor in the dramatic suspension of Ant Group’s blockbuster IPO in Shanghai and Hong Kong in November 2020.
In March, the South China Morning Post reported that JD Digits was likely to withdraw its application for an IPO on Shanghai’s Nasdaq-style STAR Market given the changing business environment after the halt of Ant Group’s IPO.
In February, China’s State Administration for Market Regulation issued new antitrust rules to prevent internet platforms from price fixing, restricting technologies and using data and algorithms to manipulate the market.
Contact reporter Ding Yi (firstname.lastname@example.org)