Jack Ma got a double sweep from the adjusters.
Photo:
cofrini factory/ Agence France-Presse/Getty Images
Update 24. December 2020 at 1:34 p.m. (Eastern time).
The billionaire founder of the Chinese e-commerce giant Alibaba is unlikely to celebrate Christmas this year.
Jack Ma
was beaten twice on Christmas Eve: The Chinese antitrust regulator has launched an investigation into Alibaba, while Ant Group, the company’s financial subsidiary, has been convened to discuss competition and consumer rights issues.
In particular, regulators mentioned the practice of forcing traders to sell exclusively on Alibaba platforms. This is a long-standing problem in Chinese e-commerce, which is dominated by Alibaba.
JD.com,
Alibaba’s competitor has been complaining about this for years and is taking legal action against the market leader. The abuse of power of digital platforms is also the subject of antitrust cases in the United States and Europe against companies such as
Amazon
and Google.
This is not the first time the government has tried to intervene. Last November, the antitrust regulator called on twenty e-commerce platforms to ask them to put an end to monopolistic practices. But recent events have reinforced the impression that Beijing is a company.
The government last month announced draft antitrust rules for digital platforms after regulators abruptly halted the Ants Group IPO of $34 billion. This decision seems to have been approved by the top of the Chinese governance structure. At a meeting earlier this month, President Xi promised to intensify the cartels’ efforts to prevent disorderly capital formation. Since then, the regulatory authorities have fined Alibaba and Tencent for acquisitions made years ago. Just this week the government warned the internet giants about the unfair pricing of so-called ‘bulk buying’, a popular way to sell products online.
All these measures may mean that Alibaba and other Internet giants will be subject to increased surveillance in the future, after years of rapid growth and relatively few restrictions. Alibaba shares listed on the US stock exchanges fell by 13% on Thursday. This means an annual increase in market share of only 5 %, which is less than both the larger market and the smaller competitors. JD.com shares have more than doubled this year, while Pinduoduo shares have almost quadrupled. Investors can be too relaxed due to the ambivalent attitude of Alibaba’s competitors. Uncertainty about the regulations can also negate their benefit.
Throughout the industry, investors who want a Christmas bonus are hoping to get a piece of coal from Beijing instead.
Just days before Chinese technology giant Ant Group was set up to go public in what would have been the world’s largest IPO, regulators put their plans on hold. Quentin Webb of WSJ explains what the sudden turn of events is and what the suspension of the IPO means for the future of Ant. Photo: Ali Song/Reuters
Email Jackie Wong at [email protected].
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