China has launched an antitrust investigation into the Alibaba Group and will convene the subsidiary of tech giant Ant Group to meet in the coming days, regulators said Thursday, in the latest blow to the e-commerce empire and Jack Ma’s financial technology.
The investigation is part of an accelerated crackdown on monopoly behavior in China’s booming internet space and the latest setback by Ma, the 56-year-old former school teacher who founded Alibaba and has become China’s most famous entrepreneur.
This follows China’s dramatic suspension last month of Ant’s planned $ 37 billion initial public offering, which was set to be the largest in the world, just two days before shares began. to trade in Shanghai and Hong Kong.
In a heavily edited editorial, the People’s Daily of the ruling Communist Party said that if “monopoly is tolerated and businesses are allowed to develop in a haphazard and barbaric manner, the industry will not develop in a healthy and sustainable ”.
Alibaba shares fell nearly 9% in Hong Kong on Thursday morning.
Regulators have warned Alibaba against the so-called “pick one of two” practice whereby merchants are required to sign exclusive cooperation pacts preventing them from offering products on competing platforms.
The State Administration for Market Regulation (SAMR) said in a statement Thursday that it had launched an investigation into the practice.
Financial regulators will also meet with Alibaba Ant Group’s fintech subsidiary in the coming days, according to a separate statement from the People’s Bank of China on Thursday, casting another cloud over a possible resumption of share selling.
The meeting will “guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers,” the statement said.
Ant said he has received notice from regulators and “complies with all regulatory requirements.”
Alibaba said it will cooperate with the investigation and that its operations remain normal.
Fred Hu, chairman of Primavera Capital Group, an investor at Ant, said global markets will be watching closely to see if the measures are “politically motivated or truly impartial law enforcement” and if regulators are only targeting the private sector. but not state monopolies.
“It would be a tragedy if antitrust law were to be seen as ‘targeting’ only successful private technology companies,” he said.
Beijing last month released draft rules aimed at preventing monopoly behavior by internet companies, marking China’s first serious antitrust move against the industry.
China’s Politburo this month pledged to strengthen anti-monopoly efforts next year and curb “disorderly capital expansion.”
China also warned internet giants this month that it will not tolerate monopoly practices and braces for closer scrutiny, as it imposes fines and announces merger investigations involving Alibaba and Tencent Holdings.
In China, Alibaba’s main e-commerce platform competes with competitors such as JD.com Inc and Pinduoduo Inc.
“This is clearly an escalation of coordinated efforts to contain the Jack Ma empire, which symbolized the new Chinese entities ‘too big to fail’,” said Dong Ximiao, a researcher at the Zhongguancun Internet Finance Institute, to the Bloomberg News Agency. “The Chinese authorities want to see a smaller, less dominant and more compliant company.”
State media have expressed support for regulators.
“Fair competition is at the heart of the market economy” while monopoly “distorts the allocation of resources, harms the interests of market players and consumers, and kills technological progress,” the Daily said People.
China’s internet industry has benefited from government support for innovation, but the industry must abide by the rules and laws, he added.
Regulators have also become increasingly uncomfortable with parts of Ant’s sprawling empire, primarily its top-grossing credit business which contributed nearly 40% of Ant’s first-half revenue. of the year.
Days before Ant’s scheduled listing, leading financial regulators told Ma and two senior executives that the company’s lucrative online lending business would come under tighter government scrutiny, sources said. to the Reuters news agency.