- Alibaba cofounder Jack Ma has reappeared.
- Alibaba shares fell after news of an investigation into its anti-competition practices.
- Alibaba is arguably the biggest e-commerce B2B platform in China.
A report by Citigroup reveals that a significant number of ultra-rich Alibaba investors, who are also clients of its firm, rushed to sell its shares in the aftermath of the recent monopoly probe by the Chinese authorities. Shares of the e-commerce giant are weltering due to an anti-trust probe arising from some of its alleged exclusivity requirements.
The Chinese government is currently investigating reports of Alibaba Group Holding Limited forcing users to exclusively use its platform and not its competitors. Shares of the B2B platform plunged by as much as 8 percent after news of the scrutiny emerged.
The equity of its rivals, Tencent Holdings Ltd, JD.com, and Meituan also tumbled in unison as fears grew over similar impending regulatory crackdowns. China’s State Administration for Market Regulation, the agency tasked with probing monopolies, and anti-competition practices, was the first government agency to announce the appraisal.
Once hailed as the nation’s flag-bearer of e-commerce and technological ascendancy, Chinese authorities now fear that the company may have become too big for its britches and risks squashing equally promising ventures.
Alibaba currently wields clout in a wide range of sectors in China. The company’s current product and service portfolio includes web portals, electronic payment systems, cloud computing services, and shopping search engines. The sheer size of the company’s reach means that it impacts hundreds of millions of lives every day.
The concern first came up in November, when Chinese regulators rushed to forestall Ant Group‘s $35 billion initial public offering (IPO). The company, which is owned by Alibaba, came under investigation for its investment and anti-competition practices.
At the time, Chinese authorities said that concerns related to the company were mainly related to the group’s mode of operation and considerations related to consumer interests.
The following is an excerpt from the statement released by the Communist Party in China regarding the latest move to clamp down on Alibaba’s power.
“(It) is an important measure for our country to strengthen antitrust oversight in the internet sector and promote a healthy long-term development of the digital economy.
If monopoly is tolerated and companies are allowed to expand in a disorderly and barbarous way, the industry will not develop in a healthy and sustainable way.”
Current regulators involved in Alibaba’s case include the China Banking and Insurance Regulatory Commission, State Administration of Foreign Exchange, and China Securities Regulatory Commission.
Jack Ma is Back
Alibaba’s shares have been bearish since December 24 when the anti-trust probe was first announced. The firm’s stock has been under additional pressure due to the recent reports of cofounder Jack Ma’s disappearance.
His reemergence two days ago, after months of absence, sent the company’s stock soaring. As a result, Alibaba’s American Depositary Receipts (ADRs) climbed more than 5 percent on Wednesday.
It is, however, unclear whether this will be enough to mollify investors, who have been shaken by the recent turn of events.