China tightens crackdown on Alibaba with an antimonopoly probe; Xi adamant about Jack Ma

Chinese regulators on Thursday launched an anti-monopoly investigation into e-commerce giant Alibaba Group and stepped up official efforts to tighten control over China’s fast-growing technology industry. The state administration for market regulation (SAMR) said it is examining Alibaba’s policy of “choosing one of two”, which requires business partners to avoid dealing with competitors. The one-sentence statement did not provide details of possible penalties or a schedule for announcing a result.

China launches probe in Alibaba

Chinese leaders had previously said an economic priority in the coming year would be to step up antimonopoly enforcement, according to the Associated Press. They seem particularly concerned about tightening control over Alibaba and other dominant internet companies expanding into finance, healthcare, and other businesses. According to media reports, Alibaba’s shares fell 6% in early Hong Kong trading.

Chinese state media expressed their support for the regulators. The CCP’s official mouthpiece, People’s Daily, said, “Fair competition is at the core of a market economy,” while monopoly “distorts the allocation of resources, affects the interests of market participants and consumers, and kills technological advancement.” China’s internet sector has benefited from government support for innovation, but the industry must adhere to rules and laws, she added.

Alibaba’s founder, Jack Ma, is China’s richest entrepreneur and one of the country’s best-known global figures. Before that, regulators had forced the suspension of the stock market debut of Ant Group, an online financial platform spun off from Alibaba. A separate announcement later said that Ant officials had been asked to meet with regulators.

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Jack Ma and Alibaba’s recent troubles are believed to directly affect Chinese President Xi Jinping as Ma criticizes Chinese regulations and guidelines. It is speculated that Jinping personally sunk Alibaba’s planned IPO, touted as the greatest of all time in an ego fight.

Alibaba, Tencent unit punished under antimonopoly law

Alibaba, the world’s largest e-commerce company by total sales, and a Tencent Holdings-backed company were fined in mid-December for failing to apply for official approval prior to some acquisitions. In a statement, the Chinese market regulation government said it fined Alibaba 500,000 yuan (US $ 76,500) for increasing its stake in Intime Retail Group to 73.79% in 2017 without authorization.

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China Literature, an online publisher and e-book company spun off from Tencent, was fined the same for failing to apply for approval to acquire New Classics Media. Separately, Shenzhen Hive Box, supported by the Chinese courier company SF Express, was censored for its acquisition of China Post Smart Logistics.

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In November, the government released proposed regulations to prevent anti-competitive behavior by Internet companies, such as signing exclusive contracts and using subsidies to eliminate competitors.

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(With agency entries)