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China launches landmark probe into online retail behemoth Alibaba

It’s one of the first investigations of its kind within the country’s runaway tech sector.
Dec 24th 2020, 12:35 PM 24,400 21

CHINA HAS LAUNCHED an anti-monopoly investigation into e-commerce giant  Alibaba, regulators said this morning.

Authorities will also hold “supervisory and guidance” talks with Alibaba’s gigantic financial services subsidiary Ant Group, Chinese state media reported, just weeks after its record-breaking initial public offering (IPO) was halted at the last minute by Beijing.

The continued squeeze on one of China’s most influential companies is the latest sign that the country’s leadership is ready to deflate the ambitions of big tech firms in a runaway internet sector, which has made Alibaba founder Jack Ma one of China’s richest people with an estimated $58 billion fortune.

Investigators are probing Alibaba for “suspected monopolistic practices”, the Chinese State Administration for Market Regulation said in a statement.

The investigation threatens to impede the growth of Alibaba, a tech juggernaut which revolutionised the e-commerce landscape of China.

Alibaba shares tumbled 8.6% to a five-month low in Hong Kong on the news.

In a statement, the company said it “will actively cooperate with the regulators on the investigation”.

Financial services subsidiary Ant Group said it too would cooperate and “diligently study and strictly comply with regulatory departments’ requests”.

Ant Group made its name through its main product Alipay, the online payments platform that is now deeply embedded in China’s economy.

But the company has also expanded into offering loans, credit, investments and insurance to hundreds of millions of consumers and small businesses, spurring fear and jealously in a wider banking system geared more for supporting state policy and large corporations.

The outspoken Ma — a former teacher — had previously lashed out at China’s outdated financial system, calling state-owned banks “pawn shops” in an October speech that led to him being summoned for regulatory talks shortly before Ant’s IPO was suspended.

He has edged away from the public limelight since the IPO collapsed.

‘Disorderly expansion’ 

Noises from the top of the Chinese Communist Party can be ominous for companies perceived to have outsized ambitions.

Party leaders at last week’s Central Economic Work Conference vowed to strengthen anti-trust measures and “firmly oppose monopolies” while the party’s executive body has also vowed to crack down on “disorderly capital expansion”.

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This year, Beijing has also implemented new regulations to contain potential risks in China’s growing online lending industry, as the fintech arms of internet firms including Alibaba and Tencent have expanded and consolidated power over the market.

China’s market regulator in November issued draft antitrust guidelines for internet platform economies that highlighted examples of anti-competitive behaviour.

State media have repeatedly called for tighter oversight of these firms, warning of potential financial instability as a result of their unregulated rapid growth.

Bad debt in China’s chaotic financial system is a perennial risk, and regulators launched a crackdown on a growing nationwide credit addiction three years ago owing to fears of a financial meltdown.

© Agence France-Presse

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