There was an announcement on Thursday by The State Administration for Market Regulation which declared an antitrust investigation to be made into Alibaba, a Chinese multinational technology company specializing in e-commerce. China will also direct the tech giant’s Ant Group affiliate to meet in the coming days, regulators said on Thursday, in the latest blow for Jack Ma’s e-commerce and fintech empire.
The market regulator stated that the investigation is mainly due to suspected monopolistic practices, including the company’s strategy of forcing merchants to sell exclusively on its platform and skip rivaling platforms, a practice called “pick one of two” in china.
This investigation into Alibaba had been announced just recently after complaints. The company’s shares fell down more than 8% on the Hong Kong Stock Exchange on Thursday.
On the very same day, Xinhua reported that Ant Group (formerly known as Ant Financial and Alipay), Alibaba’s affiliate, has been summoned by a group of finance authorities to discuss its “compliance” work. Ant, which operates the popular Alipay e-wallet and works as a middle platform for financial services and customers, has pledged to take measures to curb debt risks after Chinese authorities abruptly called off it’s colossal initial public offering last month.
“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,” Alibaba said in a statement.
Alibaba said that it will totally co-operate with the regulators for its ongoing investigation and also that the company’s business operations will remain normal.
“This is China’s first antitrust investigation into a Chinese internet company for abusing its market dominance,” said Scott Yu, an antitrust expert at Zhong Lun law firm. “In a worst-case scenario, Alibaba could be fined up to 10 percent of its previous year’s sales”, he further added. The lawyers believe that the government already had some evidence to support its case and that’s how the formal investigation could initiate.
The regulators have some evidence but it will be very hard to determine the company’s monopolistic behavior and its punishments as said by Yu Jianhua at Shanghai-based DeBund Law Offices. It is also believed that this antitrust probe has become an important issue concerning the country’s (China) overall situation.