China files anti-monopoly investigation on e-commerce giant Alibaba
- by Claude Bryan
- in Markets
- — Dec 26, 2020
A Chinese antitrust probe into whether Alibaba Group Holding Ltd. abused its dominant market position casts a spotlight on long-standing contentions from merchants and rivals that the e-commerce giant pressures some sellers to operate only on its platforms. This is your (briefer than usual) Daily Crunch for December 24, 2020.
Chinese regulators said Thursday they had launched an anti-monopoly investigation into Alibaba, the nation's biggest tech company, and separately, other watchdogs said they would hold talks with Alibaba's affiliate fintech company Ant Group.
A spokesperson for Alibaba said the company "will actively cooperate with the regulators on the investigation".
The company racked up $19.3 billion in core commerce revenue in its fiscal Q2 2021 (ended September 30, 2020), showing it has remained strong during the pandemic.
Reportedly, Ant Group, Alipay, Ant Financial were gearing up for what would have been the largest initial public offering in the world when it was suddenly closed by Beijing 48 hours before the trading would have started in Hong Kong and Shanghai.
The State Administration for Market Regulation announced on Thursday that a probe is underway into Alibaba's monopoly conduct. "It's clearly an escalation of coordinated efforts to rein in Ma's empire, which symbolised China's new "too-big-to-fail" entities", said Dong Ximiao, a researcher at Zhongguancun Internet Finance Institute.
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Ant said it had received a notice from regulators and would "comply with all regulatory requirements". As of early December, the man most closely identified with the meteoric rise of China Inc was advised by the government to stay in the country, a person familiar with the matter has said.
The Hong Kong-listed shares of Alibaba opened roughly 3.5% down on Thursday and slid another 5% in the next hour. The IPO was on track to be the world's largest.
Alibaba hit headlines Wednesday after Foreign Policy reported that China has demanded its big tech companies process stolen U.S. data for the nation's intelligence agencies upon request.
Regulators made the decision to block the IPO just days before the launch, after raising concerns about its micro-lending services.
The Chinese market regulator said it was looking into Alibaba's policy of "choose one of two", which requires its business partners to avoid dealing with competitors. The rules that China introduced in November seemed to be directed specifically at Ma, Alibaba, and another of his firms, called Ant Group.
