The Financial Times reported on the 24th that the Chinese government has begun an antitrust investigation against Alibaba.
The investigation focuses on allegations that Alibaba has engaged in competition-disrupting behavior, such as forcing merchants to sell exclusively on its own platform.
The State Market Supervisory and Management Administration announced that a report on Alibaba’s unfair practices was received and an investigation was initiated.
Alibaba said, “We will actively cooperate with the financial authorities in this investigation.” As news of the antitrust investigation became known, Alibaba’s stock price, which is listed on the Hong Kong Stock Exchange, fell by 6%.
Prior to this, China’s State Market Supervision and Management Administration summoned Alibaba’s founder, Ma Yun, to publicly reprimand. The very next day, the Ant Group IPO, which was valued at $37 billion, was canceled two days before listing.
Alibaba was subjected to antitrust investigation a month after it stopped listing its subsidiary Ant Group due to government coercion.
If the investigation reveals that anti-competitive behavior is true, it may be fined up to 10% of last year’s sales. Ant Group, an Alibaba subsidiary, also said it has received a subpoena from financial authorities.
China reinforces Internet regulations… Alibaba is the primary target
The investigation by the Chinese government is interpreted as an incident that demonstrates strong regulatory commitment to rapidly growing tech companies.
The fact that the financial authorities have entered into a formal investigation means that the government already has the evidence, local legal experts analyzed.
The Chinese government has implemented relatively loose regulatory policies against leading Internet companies such as Alibaba and Tencent. Thanks to this policy, Alibaba and others have rapidly grown into various fields such as fintech as well as internet commerce.
However, in recent months, it is observed that the Chinese government is shifting its stance toward hard-line regulation.
The People’s Daily, an agency of the Communist Party of China, commented in an editorial on the day that “the antitrust issue has become an urgent issue in China as a whole. This investigation will be an important step to strengthen antitrust regulations in the Internet sector.”
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Chinese regulators unveiled a draft guideline for antitrust targeting the Internet sector last month. The draft came shortly after Alibaba and Ant Group founder Ma Yun made a speech in Shanghai criticizing regulators and state banks.
As a result, there is also an analysis that the Chinese government has launched an antitrust investigation to contain Ma Yun, who has ugly hair.