China has launched an antitrust investigation into Alibaba Group. Regulators will summon Alibaba’s Ant Group affiliate to meet in coming days, in what is another shock to Jack Ma’s e-commerce and fintech empire.
This follows China’s sudden suspension of Ant Group’s planned $37 billion initial public offering in November 2020. The IPO had been on track to be the world’s largest; just two days before its shares were to begin trading in Shanghai and Hong Kong.
The probe claims to crack down on anticompetitive behaviour in China’s internet space. The ruling Communist Party’s People’s Daily in a strongly worded editorial said; 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”.
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The news impacted Alibaba’s standing on stock exchanges too. Alibaba shares fell by nearly 9% in Hong Kong, their lowest since July 2020. In the US, its shares fell by a staggering 13%, its largest one-day drop since its debut on the NYSE in 2014.
Regulators say they have warned Alibaba about its “choosing one from two” practice. The practice requires that merchants are to sign exclusive cooperation pacts preventing them from offering products on rival platforms.
Regulators plan to meet with Alibaba’s Ant Group fintech arm in the coming days, according to a separate statement by the People’s Bank of China. The meeting is to “guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers,” according to the statement.
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