China Launches Anti-Monopoly Investigation Into Alibaba

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China’s market regulator is pursuing an investigation into Alibaba for alleged monopolistic practices, dealing yet another blow to the country’s largest tech company

Photo: Depositphotos.com/ChinaImages

China has launched an investigation into Alibaba for alleged monopolistic practices at the company, dealing yet another blow to the country’s largest tech company.

The State Administration for Market Regulation said Thursday in a brief post on its website that it’s investigating Alibaba’s alleged practice of “er xuan yi,” which means forcing merchants to sell exclusively on one website. It didn’t offer any further details.

An Alibaba spokesperson said the company “will actively cooperate with the regulators” and business operations “remain normal.”

Shares of Chinese e-commerce giant Alibaba plunged almost 8% in Hong Kong in the immediate aftermath of the announcement.

The investigation comes amid heightened scrutiny of businesses co-founded by China’s one-time richest man Jack Ma. Last month, China’s policymakers released a set of draft rules that would give regulators wide-ranging power to rein in the market influence of Ma’s e-commerce titan. Their intention is to prevent China’s dominant tech companies from forcing merchants to agree to exclusive contracts or selling their products below cost.

In the meantime, Ma’s fintech giant Ant Group is facing big challenges of its own. Officials from the country’s four top financial regulators that included the country’s central bank, the People’s Bank of China, and the China Securities Regulatory Commission, said they would soon summon the company to another meeting, according to a report by the official Xinhua News Agency that was published on the same day of the anti-trust probe.

Regulators said they’d supervise Ant in terms of the compliance and operation of its finance business, according to Xinhua. The company’s $35 billion initial public offering, which would have been the world’s largest, was scuttled in early November amid sudden changes in the regulatory environment.

Ant said it will “seriously study and strictly comply with all regulatory requirements and commit full efforts to fulfill all related work” via its official account on Chinese instant messaging service WeChat.

Yue Wang

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