Sectors

China launches antitrust investigation against online retailer Alibaba

Trouble for the largest online retailer in China: The communist government is investigating how the power of Alibaba has grown too great. The company’s stock crashed.

The Chinese online giant Alibaba has come under massive pressure from local authorities. China’s market regulator opened an investigation into possible “monopoly practices” by the group, it said on Thursday. According to the Chinese state media, the authority also wants to hold talks with Ant, Alibaba’s financial service provider, as part of its supervisory tasks.

The authorities did not explain exactly what the suspicions against Alibaba consist of. The group announced that it would “actively cooperate” in the investigation. The Ant group stated that it would “carefully study and strictly implement” the agency’s guidelines. Alibaba shares plunged more than eight percent after the regulatory authority announced on the Hong Kong stock exchange.

In early November, Ant surprisingly canceled his IPO. The background was apparently also pressure from the Chinese supervisory authorities. With a volume equivalent to a good 27 billion euros, the Ant IPO in Shanghai and Hong Kong should be the largest of all time.

Dominant position in China

The background to the action against Alibaba and Ant is evidently the efforts of the communist leadership to curb the rapidly growing market power of private Chinese tech companies. Alibaba is one of the most influential Chinese corporations, and company founder Jack Ma is one of the richest people in China with an estimated fortune of around 48 billion euros.

Ant is part of Alipay, the leading online payment service in China. Before the IPO was canceled, Alipay was criticized by the state-controlled banking sector. Ma had been called in by the authorities.

According to the company, more than 700 million people in China use Alipay every month. According to this, more than 14.4 trillion euros are transferred annually via the service. Alipay also grants loans to households and smaller companies, offers asset management and insurance – and thus extends into the state-controlled financial sector.

Does the Chinese government want to keep companies small?

The charismatic Ma had sharply criticized China’s state financial system in October. He called it obsolete and compared it to traditional Chinese pawn shops.

There is apparently an increase in “coordinated efforts to shackle the Jack Ma empire,” said analyst Dong Ximiao of the US news agency Bloomberg. The actions of the authorities against the group contain the “subliminal political message that no company and no individual in China can grow so large that they could potentially challenge the authority of the Chinese Communist Party,” said Richard McGregor, East Asia expert at Lowy Institute in Sydney.

Tags

Related Articles

Back to top button
Close
Close