Some might say it’s long overdue, but China is finally starting to sit up and scrutinize billionaire Jack Ma’s massive Alibaba empire.
According to a report by Business Insider, Chinese regulators said on Thursday that they had officially launched an investigation into Alibaba to determine if anti-competitive and monopolistic practices are being pursued by the largest tech company in the nation. Additionally, other watchdogs have said that they will hold talks with Ant Group, the fintech company that operates as an Alibaba affiliate.
It is worth noting that a mere two months ago, Ant Group pulled off the biggest IPO of all time, beating Saudi oil titan Aramco to raise a world-record $34.4 billion. As cofounder of both Alibaba and Ant, Jack Ma’s position as the richest man in China simply solidified after this move.
China’s State Administration for Market Regulation (SAMR) is now looking into Alibaba’s practice of forcing sellers to sign exclusivity contracts. In other words, it appears that the ecommerce platform prevents sellers from selling their products anywhere else, thereby assuming total control over their services.
While this has been criticized by retailers all across China and viewed as an anti-competitive practice, a former senior Alibaba executive called it “standard market practice.”
As a result of this regulatory measure undertaken by SAMR, Alibaba’s shares fell by 8.1% on Thursday, which is the largest single-day drop the company has suffered from since mid-November of this year.
Meanwhile, China’s central bank and three financial regulators said on Thursday that they would hold talks with Ant Group in order to urge the company to accept stricter financial regulations for its banking services.
As per a Wall Street Journal report, both Alibaba and Ant Group said that they have been made aware of the regulatory actions being taken against them and that they would cooperate with the regulators.