Alibaba's (BABA  ) Ant Group was set to IPO last week, however the event was delayed by the Chinese government. According to sources, the decision was made to punish Jack Ma due to his criticism of Chinese regulators.

There's always been a constant tension with Ma as Alibaba becomes even more powerful and influential. Of course, the Chinese government is always wary of any potential threats. In recent years, Ma's public profile has grown, and he's been more outspoken about his thoughts about all types of matters including politics.

It's not too dissimilar from politicians in the U.S. who are coming to grips with the fact that the tech companies have more power than them by many measures. However, Ma has always sought to cultivate good relationships with the Chinese government, by rarely criticizing them in public. Many considered Alibaba safer than FAANG--Facebook (FB  ), Amazon (AMZN  ), Apple (AAPL  ), Netflix (NFLX  ) and Google (GOOGL  )--stocks due to less risk of regulation or antitrust action.

IPO Delay

Ma was critical about regulators' decision to force Ant Financial to hold more capital on its balance sheet which reduces the business' profitability. Ma was unhappy that his business was being perceived as a traditional financial business by regulators rather than a tech company. He criticized the regulators for not understanding the business and being unwilling to adopt to new business models.

The Chinese government believes that Ant's size and assets make it a systemic threat to the country's financial system, if it collapses. Therefore, it believes the company needs to be regulated more rigidly. Ma made these comments a few days after regulators gave the go-ahead to the IPO. And, then they quickly rescinded their approval. Many experts believe that such a move would only be possible with President Xi's approval and consensus among the top leadership.

Alibaba's Stock Dropping

Alibaba is down nearly 25% since this decision. The Ant Group IPO was set to be the biggest IPO in history and instantly make it one of the most valuable financial institutions in the world. Now, it's less certain what will happen, in terms of when Alibaba will be able to unlock this asset.

In recent weeks, Chinese Internet stocks have been very strong. KraneShares CSI China Internet ETF (KWEB  ), a basket of the top stocks in the group, had been outperforming the market and making new highs. So, it's certainly unusual that the largest stock in the group is struggling.

However, for long-term investors, this correction could be a good, entry point. Nothing about this decision affects Alibaba's eCommerce or cloud computing business. It also doesn't affect Ant Group's business, even though it might lead to a drop in its valuation. However, this is more than reflected by the stock's drop in recent weeks.