Jack Ma-led Alibaba Group is being investigated under the anti-monopoly law, a measure seen as an effort by ruling Communist Party to control fast-growing tech industries.
“China’s State Administration for Market Regulation (SAMR) has started investigation on Alibaba Group for alleged monopoly conduct including implementing an ‘exclusive dealing agreement’,” according to Xinhua.
The announcement shook several investors who dumped shares of Alibaba’s subsidiaries and affiliates, as well as other Internet firms that are at risk of being targeted by Chinese antitrust regulators. Alibaba shares fell nearly 9 per cent in Hong Kong.
Owned by China’s charismatic entrepreneur Jack Ma, a schoolteacher who became a multi-billionaire, Alibaba is arguably the world’s biggest e-commerce company with hundreds of millions of users and billions of dollars in turnover. According to Bloomberg, it is Asia’s “most valuable corporation”.
Its three main sites Taobao, Tmall and Alibaba.com host millions of merchants and businesses.
The SAMR probe will zero in on the monopolistic behaviour, the so-called “choosing one from two” practice and coaxing merchants to sign exclusive cooperation pacts, which then prevents them from offering products on rival platforms.
Separately, the People’s Bank of China, China Securities Regulatory Commission and the China Banking Regulatory Commission will also meet affiliate Ant Group for “supervisory and guidance” talks.
Ant Group is the developer of AliPay, a popular mobile payment system in China, which has also invested in India’s Paytm.