“ANCTING ON INFORMATION, State Administration of China for Market Regulation [SAMR] investigation started [into] Alibaba Group for alleged monopoly conduct, including the implementation of an ‘exclusive trading agreement’. ”This brief note, posted by Xinhua, the state news agency, on December 24, was enough to reduce China’s most powerful online titan. Not even the announcement three days after an extra $ 6 billion in share buyback prevented its market value from falling. As of December 28, it had fallen 13%, or $ 91 billion. By comparison, the US regulators’ detailed accusation sheets against tech giants like Facebook and Google in recent weeks have sparked a yawn from investors.
Alibaba’s investigation is the first of its kind in Chinese e-commerce. The time is right – a month after the authorities suddenly suspended the initial $ 37 billion public offering (IPO) from Alibaba’s fintech affiliate, Ant Group, and days before regulators tell Ant to restrict lending and wealth management activities – suggests that China’s way of punishing the extravagant co-founder of the two companies, Jack Ma .
This can be. Ant IPO it was frozen after Ma compared China’s state-owned banks to pawn shops. Chinese guard dogs often launch lightning strikes to prevent others from misbehaving, says Angela Zhang of the University of Hong Kong. But the survey also signals concerns about the online economy, which is effervescent but also increasingly concentrated. As investors analyzed Xinhua’s note, the stock prices of other Internet giants, such as Tencent and Meituan, fell almost as sharply as those of Alibaba.
The complaint against Alibaba focuses on the practice of getting merchants or brands to sign contracts to sell products exclusively on its platform. Those doing business in rival markets are at risk of having Internet traffic diverted from their online stores in Alibaba’s Tmall emporium to other sellers.
These arrangements are not new. In 2015 JD.com, a small e-emporium supported by Tencent, has filed a lawsuit against Alibaba over a similar issue. Nor are they exclusive to Mr. Ma’s company, which has launched a competing complaint against JD.com in the same year. Since then, these and other complaints have been largely ignored by regulators. Why the turnaround?
Chinese trusted hunters have long resisted restraining an industry considered world-renowned and supported Beijing. Now, as in the West, they fear that some giants will control essential services – e-commerce, logistics, payments, hitchhiking, food delivery, social media, messaging. Common practices, such as selling products below cost to attract customers, seem more problematic in an industry where the top three companies control more than 90% of the market than in a less concentrated sector. In November SAMR said offering customers different prices based on their purchasing power, minus user data, may be illegal.
Another reason for China’s newfound zeal (Ma’s jokes aside) is its greater ability to destroy trust. SAMR it was formed only in 2018, combining the offices of three regulators. He still struggles to keep up with the rapid changes in the online market; most employees are busy evaluating mergers and acquisitions. But it has more know-how and manpower than it used to – and it seems eager to deploy them.
This article appeared in the Business section of the print edition with the title “Mo money, Ma’s problems”