mollyfamwatChina’s antitrust expertise in this area.
Alibaba Group Holding Ltd.
BABA -13.34%.
The abuse of its dominant position casts a shadow over long-standing accusations by retailers and rivals that the e-commerce giant is putting pressure on some traders to operate only on its platforms.
An antitrust investigation announced Thursday by Beijing’s state-run Market Regulation Bureau is increasing pressure on China’s largest technology giants, who have spent much of the past year blocking their access to the United States’ markets and suppliers.
The timing of the Alibaba investigation, which was merged on Thursday with a regulatory agenda for the Ant Group, Alibaba’s giant financial subsidiary, is the latest sign of a global regulatory shift for technology giants who until recently were celebrated for creating wealth as they climbed the ladder.
Domestically, China’s double regulatory decision on Thursday also marked the final low point in a rapidly deteriorating political situation.
Jack Ma,
Alibaba and the founding billionaire Ant. A few weeks earlier, Mr Ma, at the height of his popularity regarding the block ants list project, had used a tirade at a regulatory event to evoke what he called their outdated mentality in the minds of senior government officials.
The IPO has now been cancelled and regulators have warned for more supervision of the technology industry.
While the political concerns surrounding Alibaba are new, the complaint about what the main Beijing market regulator dealt with on Thursday is not. Accusations of a practice called there xuan yi – literally, choose one of two – are a mainstay of Chinese online commerce for at least five years, while Alibaba, operator of the dominant e-commerce platforms Taobao and Tmall, is watching the emergence of a rival.
JD.com Inc.
and, more recently, a
Pinduoduo Inc.
According to Alibaba’s competitors and some traders, the company has penalised certain brands that sell products on both Alibaba’s and competitors’ platforms. These measures include banning the promotion of high traffic on Alibaba’s services or moving their lists down in search results, said Ben Cavendar, managing director of the China Market Research Group in Shanghai.
China’s doubleregulations on Thursday marked a new low for the political fortune of Jack Ma, Alibaba and the founding billionaire Ant..
Photo:
Philippe Lopez/Agence France-Presse/Getty Images
On Thursday, Alibaba said it would work with regulators but did not comment specifically on Er Xuan Yi’s allegations. A former manager described his personal social media practices as the industry standard last year.
In 2015, JD.com filed a complaint with the market regulator, claiming that Alibaba forced providers to choose between Tmall and other platforms. According to JD.com’s complaint at the time, Alibaba threatened to restrict the traffic and resources of the brands sold on the Alibaba and JD.com platforms during the annual shopping festival.
It is not known what happened to JD.com’s original complaint, and neither company responded to requests to comment on the complaint on Thursday. But two years later, JD.com sued Alibaba for this alleged practice.
According to a legal document of the case, JD.com stated that the Alibaba Tmall requires merchants to agree not to open stores on the JD.com platform. The Beijing-based company JD.com said at the time that Alibaba had followed a similar practice since 2013, and asked the court for 1 billion yuan, the equivalent of $153 million, in compensation.
The case is still ongoing and neither company has responded to requests for comments. JD.com’s CFO acknowledged the conflict during a conference call with analysts in 2017 and said more than 100 brands had left the JD.com platform because of certain competitive practices, without elaborating.
Traders complained too. In October 2019, Guangdong Galanz Enterprise Co., a leading manufacturer of microwave ovens in southern China, sued Tmall after Galanz’s online traffic decreased and the site seemed to disappear from Tmall’s search results after the company’s representatives visited Alibaba’s competitor, Pinduoduo, in May 2019, as reported in the Chinese state media at the time.
In June, Galanz dropped the charges and signed a cooperation agreement with Alibaba two weeks later, according to the state media.
Alibaba, Pinduoduo and Galanz did not respond to requests for comments.
Just days before Chinese technology giant Ant Group was set up to go public in what would have been the world’s largest IPO, regulators put their plans on hold. Quentin Webb of WSJ explains what the sudden turn of events is and what the suspension of the IPO means for the future of Ant. Photo: Ali Song/Reuters
Founded in Hangzhou, East China, in 1999, Alibaba, which was the world’s largest company in the fiscal year ending December 31, said it was not a newcomer to the market. March generated $71 billion in annual revenue and earned most of his money by selling advertising, collecting commissions and providing services to retailers selling merchandise on his websites. For example, for example..,
Amazon.com Inc,
By comparison: Alibaba has also developed in the field of cloud computing, entertainment and logistics.
In recent years, some of the main targets of Chinese antitrust cases have been foreign companies, such as B., an American chip manufacturer.
Qualcomm Inc,
who agreed to pay a fine of almost a billion dollars in 2015. The following year, Beijing fined Swiss packaging giant Tetra Pak International SA almost $100 million.
Now national internet players like Alibaba and
Tencent Holdings Ltd.
Of the country’s largest and most influential companies, regulators report that they are paying increasing attention to their business practices.
The government believes it’s time to better control market competition in the technology sector, said Charlie Chen, an analyst at China’s Renaissance Securities, a research firm.
The China Market Regulatory Commission did not react to a request for comments.
China has been home to some of the world’s largest technology companies for years. They flourished at home for years with relatively light regulation, while Western competitors remained out of the market.
In China, Alibaba and Tencent have developed online payment services that are almost ubiquitous in the country, while Tencent’s short video application Duyen. from WeChat and Bytedance Ltd. has taken a dominant position in the social media market.
As these companies collected huge amounts of data on consumption habits, their impact became increasingly worrying, reinforcing the desire to curb the sector’s growth.
European and US regulators already face the challenge of overseeing large technology companies. But unlike these countries, Chinese regulators are likely to put their technological giants in place without the public hearings that are customary in the West.
The Chinese system of investigation and use of force in cases of abuse and domination is not very transparent and is clearly not subject to judicial review, he said.
Scott Kennedy
Center for Strategic and International Studies in Washington.
-Xiao Xiao contributed to this article.
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