Jack Ma’s troubles, for the criticism that he showered on China’s communist government, seem to have just begun. Alibaba Group, the Chinese e-commerce behemoth that made Ma the billionaire he is today, has been hit with an antitrust investigation launched by the state to check for monopolistic practices. The state regulators have also said on Thursday, that they will summon the tech giant’s Ant Group affiliate to meet in the coming days.
China’s move though, isn’t really surprising. Jack Ma, who is known to be among a rare breed of public critics of the Chinese government, had said earlier in October that the country’s regulatory system was stifling innovation and must be reformed to fuel growth. This obviously did not go down well the Chinese government, which then suspended Ant Group’s $34 billion initial public offering last month. Now, the company has been hit with this new investigation, and one can’t help but wonder if Ma’s criticism of the government had anything to do with it.
As news of antitrust investigation floated, Alibaba shares plunged by 9% in Hong Kong on Thursday morning.
The State Administration for Market Regulation said on Thursday in a statement that it is investigating Alibaba over its “choosing one from two” policy. In this policy, merchants are forced to sign exclusive cooperation pacts that will let them sell through only one platform and prevent them from offering services in rival platforms like JD.com.
In a statement, Alibaba said, “Today, Alibaba Group has received notification from the State Administration for Market Regulation that an investigation has been initiated into the Company pursuant to the Anti-Monopoly Law. Alibaba will actively cooperate with the regulators on the investigation.”
According to a report by Xinhua News Agency, The People’s Bank of China, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, and State Administration of Foreign Exchange “will interview Ant Group in future to supervise and guide Ant Group to implement financial supervision and fair competition in accordance with the principles of marketization and rule of law.”
Alibaba is China’s biggest tech behemoth, and is often viewed as the Amazon of the country. This has apparently worried regulators, who are concerned that this creates a hostile environment for new businesses, and risks a monopoly. In fact, Communist Party’s People’s Daily said that if “monopoly is tolerated, and companies are allowed to expand in a disorderly and barbarian manner, the industry won’t develop in a healthy, and sustainable way”.
Alibaba is not the only tech giant facing charges of monopolistic behavior this year. On the other side of the globe, companies like Facebook and Google have also been hit with multiple lawsuits, which range from suppressing competition to partnering up for unfair advantages.