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China has launched an investigation into Alibaba over alleged monopolistic practices by the company. In doing so, it dealt another blow to the country’s largest tech company.

China launches anti-monopoly investigation into Alibaba
China launches anti-monopoly investigation into Alibaba

State agency for market regulation investigates Alibaba’s practices

The State Administration for Market Regulation said in a brief post on its website December 24th 2020 that it is investigating Alibaba’s alleged practice of “er xuan yi,” which means forcing traders to sell exclusively on a website. It offered no further details.

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

Shares of Chinese e-commerce giant Alibaba plunged nearly 8% in Hong Kong immediately after the announcement.

E-commerce titan’s market influence to be curbed

The investigation comes amid heightened scrutiny of companies co-founded by China’s once richest man Jack Ma. Last month, China’s policymakers released a draft rule giving regulators sweeping powers to curb the market influence of Ma’s e-commerce titan. The move is aimed at preventing China’s dominant tech firms from forcing traders to sign exclusive deals or sell their products below cost.

Fintech Ant Group also under pressure

Meanwhile, Ma’s fintech giant Ant Group is facing major challenges of its own. Officials from the country’s four top financial regulators, including the country’s central bank, the People’s Bank of China, and the China Securities Regulatory Commission, said they would summon the company for another meeting soon, according to a report published by the official Xinhua news agency on the same day of the antitrust investigation.

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


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