Alibaba targeted in China antitrust probe
Anti-monopoly probe into Alibaba is Beijing’s strongest action yet against the tech giant and its billionaire founder Jack Ma.
Chinese regulators say they have launched an antitrust investigation into Chinese e-commerce giant Alibaba Group Holding and separately said they would summon affiliate Ant Group for discussions on competition and consumer rights.
Taken together, the two actions mark the strongest enforcement action by Beijing against the country’s biggest technology giant and Jack Ma, its billionaire founder.
The Alibaba investigation was revealed by China’s antimonopoly regulator, the State Administration for Market Regulation, which said in a brief statement that it was acting on reports that Alibaba was pressuring merchants who sell goods on its platforms to commit to not selling on its competitors. Alibaba’s e-commerce platforms, Taobao and Tmall, compete with domestic rivals JD.com and Pinduoduo.
Alibaba didn’t immediately respond to a request for comment. Mr Ma couldn’t immediately be reached for comment. JD.com and Pinduoduo didn’t immediately reply to requests for comment.
China’s central bank and three other regulators, meantime, said in a separate joint statement that they would summon Ant for talks. Ant acknowledged in a statement that it had received a meeting notice from the regulators, adding that it would “seriously study and strictly comply with all regulatory requirements.”
Alibaba shares fell almost 7 per cent in early trading in Hong Kong, while JD.com declined 1.4 per cent. Alibaba’s rival Tencent Holdings, which some investors believe could also get drawn into a broader regulatory crackdown, edged down 1 per cent amid a slight gain in the broader stock market.
The actions taken are the latest and among the most dramatic in a new campaign by Beijing aimed at tightening oversight of domestic technology companies. In November, authorities introduced new draft antitrust laws to restrict businesses’ data collection and use and measures to protect consumers.
Since then, senior Chinese leaders have spoken publicly about limiting the market power of Chinese firms, and have also sought to monitor emerging consumer internet sectors more closely.
Regulators pulled the plug last month on the planned initial public offering of Ant Group in Hong Kong and Shanghai, which was set to raise $US34 billion in the biggest stockmarket debut in history. They also released draft regulations that would force the company to cough up more of its own capital to support its lending operations, or scale them back.
Chinese internet firms have traditionally been allowed unfettered growth at home, as Beijing sought to develop its own national champions in technology. Alibaba, the owner of China’s two most popular e-commerce sites, is perhaps the most powerful conglomerate of all, with business lines spanning cloud computing services, entertainment and logistics.
Alibaba and Tencent have long traded places as Asia’s most valuable company by market capitalization.
The recent moves by Beijing to tighten the reins on Alibaba and its peers put it into closer alignment with global regulators. In the US, where Facebook and Google parent Alphabet, are facing antitrust investigations, Silicon Valley executives argue that breaking up its giants would leave it vulnerable to competition by China’s tech giants. The current wave of actions could narrow that gap.
At the same time, any new regulatory oversight or control of the tech giants will likely be seen as part of leader Xi Jinping’s attempt to assert even more political control over private industry. He has shown little regard for private entrepreneurs and has talked regularly of needs to bolster government-run companies in key sectors like finance.
On Wednesday, Ant said it had cut credit limits for some younger users of its popular digital credit-card service, a sign it is dialling back risk in its lending business following regulatory pressure.
Dow Jones Newswires
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