China launches antitrust probe into Alibaba and Ant Group for "picking one from two" strategy

nanoguy

Posts: 765   +12
Staff member
The big picture: The future looked bright ahead for Alibaba only months ago, with its share price climbing steadily amid the pandemic. However, in a first for China, the State Administration for Market Regulation has started an antitrust investigation into Alibaba and sister company Ant Group, signaling an end to the hands-on approach typically practiced by the Chinese government.

The Chinese government announced it has started an antitrust investigation into Alibaba, the country's largest tech company, which extends to sister company of Ant Group that was recently targeting an IPO at a valuation of $37 billion.

Last month, regulators suspended Ant Group's initial public offering just two days before shares were to begin trading in Shanghai and Hong Kong, in a move that is part of an ongoing crackdown on anticompetitive behavior in the country's booming tech sector.

Shares in Alibaba fell more than 8 percent to their lowest level since July. Even its largest competitors -- JD.com and Meituan -- were affected by the news.

While the full scope of the investigation is not yet clear, China's State Administration for Market Regulation (SAMR) said it's looking into Alibaba's alleged practice of forcing merchants to sign exclusivity contracts ("picking one from two"), which has generated a lot of complaints and lawsuits over the years. Regulators are meeting with Ant Group in the coming days to discuss the implementation of proper financial supervision and protections for consumers.

Both Alibaba and Ant Group said they would "comply with all regulatory requirements," and reassured investors that there's been no impact on normal day to day operations. However, if the two companies are found to be guilty of monopolistic behavior, they could be fined up to 10 percent of their annual revenue.

State-run local paper People's Daily wrote in an editorial that the investigation "is an important step in strengthening antimonopoly oversight in the internet sphere. [...] This will be beneficial to regulating an orderly sector and promoting the long-term healthy development of platforms."

Last month, the Chinese government revealed the first draft of new antitrust legislation that came as a direct response to Alibaba and Ant Group founder Jack Ma, who made a speech in Shanghai where he criticized the country's e-commerce and banking regulations.

Foreign companies like Google also face antitrust investigations, but SAMR is currently focusing on China's largest 27 e-commerce companies, including Alibaba, JD, Meituan, and Pinduoduo.

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QuantumPhysics

Posts: 4,870   +5,397
I originally got myself and friends into Alibaba at $85 and it started to dip to the $60 range. My friends sold - I didn't. It surpassed $300.

But any money to be made off "Chinese stocks" in general I hope has already been made because with Trump's anti-China Trade War and the passing of the Holding Foreign Companies Accountable Act, chances are a lot of those companies - good or bad - will either be delisted or see their values crash.

I'm afraid for my NIO, KNDI, XPENG and LI now.
 

Uncle Al

Posts: 8,014   +6,783
Yeah, I looked very seriously at that and a few more myself, but my experience with China has not been a good one. I've seen them intite companies in just to steal their technology, build duplicate factories and undersell them to the point of putting them out of business and it's happened more than a few times. Seeing this I just could not bring myself to deal with them, no matter how promising the profits might be ......
 

Jpe1701

Posts: 60   +62
The sad part is that Christmas presents I ordered from US businesses the first week of December are still sitting in various places around the country, but my first ever order from aliexpress that I ordered almost 2 weeks later was delivered today even with shipping from china.
 

Endymio

Posts: 1,334   +1,216
China's moves here are more about punishing Jack Ma than enforcing a fair regulatory environment. In October, Ma gave a speech at the Bund Summit which Chinese observers at least felt was overly critical of PRC policy. Since then, Ma has all but vanished from view, he's been officially notified to not leave the country, and government regulators scuttled both his Ant Group IPO and launched this action against Alibaba. An important reminder that China is still a totalitarian communist regime. Ma forgot his place, and is now having that reminder special-delivered.
 

Jpe1701

Posts: 60   +62
China's moves here are more about punishing Jack Ma than enforcing a fair regulatory environment. In October, Ma gave a speech at the Bund Summit which Chinese observers at least felt was overly critical of PRC policy. Since then, Ma has all but vanished from view, he's been officially notified to not leave the country, and government regulators scuttled both his Ant Group IPO and launched this action against Alibaba. An important reminder that China is still a totalitarian communist regime. Ma forgot his place, and is now having that reminder special-delivered.
Well they have to give a good show for all those millions of adoring fans so they can have something to point to when they are defending them. I'm a middle of the road independent, and I have no love for trump, but the way people seem to live in denial over this regime is mind boggling. Say what you will about the US, at least I can tell anyone I want how much I can't stand trump and not have to worry about disappearing.