Chinese market regulators announced an anti-monopoly investigation targeting Chinese e-commerce giant Alibaba Dec. 24. The same day, they summoned executives at affiliate Ant Group for a meeting about regulation compliance issues.
Why it matters: An investigation targeting Alibaba, a bellwether of China’s tech sector, highlights the country’s latest efforts to curb anti-competitive practices by China’s largest tech firms, which were practically “immune” to such regulations before.
- Chinese government previously adopted a laissez-faire attitude to the sprawling growth of Chinese tech companies like Alibaba and Tencent’s walled-garden empires. With a series of recent moves, Beijing is moving to clamp down on monopoly behavior and enforce increasingly stringent market and financial regulations.
Details: The State Administration for Market Regulation, China’s top market watchdog, said in a Thursday morning statement (in Chinese) that it has launched an investigation into accusations of monopolistic practices at Alibaba.
- The announcement didn’t offer much detail about the process and scale of the investigation, but named “forced exclusivity,” a practice in which platforms force sellers to use only one company’s platform or services, as a key focus of the investigation.
- Alibaba says in a Thursday response that it will “actively cooperate with the regulators on the investigation,” emphasizing that its business operation are continuing as normal.
- Alibaba’s Hong Kong shares dropped 8.1% on the news in Thursday trading.
- Over the coming days, sister company and fintech giant Ant Group will be meeting with top finance regulators in a parallel challenge to its dominance.
Context: Alibaba has been in a years-long public spat over the subject of “forced exclusivity” with upcoming rivals like JD, Pinduoduo, and Meituan.
- Alibaba’s PR head Wang Shuai dismissed concerns over the matter last year, stating that “so-called forced exclusivity is a non-issue,” and arguing that criticism was a tactic used by rival platforms to lash out at competitors and whip up negative public opinion.