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Alibaba Faces Antitrust Investigations From The Chinese Government

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Jack Ma’s e-commerce empire is currently getting blows as Alibaba Group has been summoned by the Chinese government to face antitrust investigations.

The government would also summon Alibaba’s subsidiary – Ant Group – to a similar hearing, in the coming days, reports say.

The antitrust hearing is part of the government’s crackdown on monopolistic behaviour in China’s internet space. Analysts believe this is a setback for China’s richest man – the 56 year old former teacher.

Jack Ma – founder of Alibaba

Last month, the Chinese government suspended Ant Group’s planned $37bn initial public offering, which was in procession to become the world’s largest. The suspension was announced two days before shares were due to begin trading in Shanghai and Hong Kong.

Read also: Bolt Raises $182 Million to Boost Operations in Europe and Africa

China’s ruling Communist Party’s People’s Daily said in an editorial 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”.

Reacting to the antitrust investigations, chairman of Primavera Capital Group, Fred Hu, said global markets would be watching closely to see whether the moves are “politically motivated or genuine impartial law enforcement.”

Mr Hu shows concerns about whether regulators target only the private sector but not state monopolies. He further said that “it would be a tragedy if the antitrust law should be seen as targeting successful private tech companies only.”

The invitation is already giving Alibaba some shivers as the company’s shares fell by nearly 9% in Hong Kong on Thursday morning.

Prior to the invitation to the antitrust hearing, regulators have warned Alibaba about the so-called “choosing one from two” practice, under which merchants are required to sign exclusive cooperation pacts.

The pact prevents merchants from offering their products on any of Alibaba’s rival platforms.

Alibaba, in response to the invitation, said it would cooperate with the government as they carry out the investigation. The e-commerce giant also claims that its operations remain normal.

Responding separately, Ant Group said it had received a notice from regulators and would “comply with all regulatory requirements.”

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