The Chinese government initiated an antitrust investigation into Jack Ma’s e-commerce and fintech empire – the Alibaba Group.
The probe is part of an accelerating crackdown on anticompetitive behaviour in China’s booming internet space, and the latest setback for Ma, the 56-year-old former school teacher who founded Alibaba and became China’s most famous entrepreneur.
It follows China’s dramatic suspension last month of Ant’s planned $37 billion initial public offering, which had been on track to be the world’s largest, just two days before shares were due to begin trading in Shanghai and Hong Kong.
In a strongly worded editorial, the ruling Communist Party’s People’s Daily said 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”.
Shares in Alibaba fell nearly 9% in Hong Kong, their lowest since July, while rivals Meituan and JD.com both fell more than 2%.
Regulators have warned Alibaba about the so-called “choosing one from two” practice under which merchants are required to sign exclusive cooperation pacts preventing them from offering products on rival platforms.
The State Administration for Market Regulation (SAMR) said on Thursday that it had launched a probe into the practice.
Financial regulators will also meet with Alibaba’s Ant Group fintech arm in coming days, according to a separate statement by the People’s Bank of China on Thursday, casting another cloud over a potential revival of the share sale.
The meeting would “guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers,” the statement said.
Ant said it had received a notice from regulators and would “comply with all regulatory requirements”. Alibaba said it would cooperate with the investigation and that its operations remained normal.
Ma has kept out of the public eye since a late October forum in Shanghai where he blasted China’s regulatory system, accusing it of stifling innovation in a speech that stung officials and set off a chain of events that led to the shelving of Ant’s IPO.
The practice of requiring a merchant to sell exclusively on one platform, which Alibaba has defended in the past, has long been a source of friction.
In a lawsuit last year, home appliance manufacturer Galanz accused Alibaba of penalising it for refusing to stop selling goods on rival platform Pinduoduo. The case was resolved. In an ongoing case, JD.com accused Alibaba’s Tmall of restricting vendors from trading with it by signing exclusive deals.
Beijing’s draft antitrust rules aim at preventing monopolistic behaviour by internet firms, and the Politburo this month vowed to strengthen anti-monopoly efforts in 2021 and rein in “disorderly capital expansion”.
China also warned internet giants this month to brace for increased scrutiny, as it slapped fines and announced probes into mergers involving Alibaba and Tencent Holdings.