New Delhi: Chinese Government kicked off a probe into alleged monopolistic practices at Alibaba Group Holding Ltd. and also summoned affiliate Ant Group Co. to a high-level meeting over financial regulations, escalating scrutiny over Jack Ma’s internet empire.
This investigative probe is part of an accelerating crackdown on anticompetitive behavior in China’s booming internet space. It’s the formal start of the Communist Party’s crackdown on the crown jewel of Ma’s sprawling dominion, spanning everything from e-commerce to logistics and social media.
The pressure on Ma is central and it is followed by China’s dramatic suspension last month of Ant’s planned $37 billion initial public offerings.
Shares in Alibaba fell nearly 9% in Hong Kong, their lowest since July, while rivals Meituan and JD.com both fell more than 2%.
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”.
“It’s clearly an escalation of coordinated efforts to rein in Jack Ma’s empire, which symbolized China’s new ‘too-big-to-fail’ entities,” said Dong Ximiao, a researcher at Zhongguancun Internet Finance Institute. “Chinese authorities want to see a smaller, less dominant and more compliant firm.”
The anti-monopoly rules now threaten to upset that status quo with a range of potential outcomes, from a benign scenario of fines to a break-up of industry leaders. Beijing’s diverse agencies now appear to be coordinating their efforts — a bad sign for the internet sector.