China Opens Antitrust Investigation Into Alibaba
The new investigation could be a much bigger deal. China’s antimonopoly law imposes a maximum fine of 10 percent on a company’s sales from the previous year, which in Alibaba’s case would be billions of dollars.
In its brief statement announcing the investigation on Thursday, the state administration of market regulation named only one form of anti-competitive behavior by Alibaba that it would investigate: exclusivity agreements, which are described in Chinese with a phrase that translates to, “Choose one of two. “
Large ecommerce websites in China have been accused for years of preventing merchants selling on their platform from selling to others, especially at large sales events like Singles Day. One of Alibaba’s main competitors, JD.com, has been fighting the company for the practice in court.
Galanz, a Chinese device maker, made headlines last year when it accused Tmall of suppressing its products from the platform’s search results after the brand partnered with a rival e-commerce company, Pinduoduo. Tmall denied the allegations, according to news reports at the time.
Cutthroat practices of this type have long been common on the Chinese Internet. Tencent, for example, blocks people using the popular WeChat messaging service from opening links to Alibaba’s Taobao website directly – this is the same as blocking links to Amazon through Amazon in the Messenger app.
“On a very, very macro-economic level, it may just be because these companies aren’t competing globally,” said Rui Ma, investor and Chinese technology analyst. Because the Chinese internet giants are fighting for advantages especially within a single market, “it seems more like a zero-sum game,” she said.
Political insiders and investors in China have speculated for years that the nation’s leader, Xi Jinping, may be tempted to crack down on Mr. Ma because he feared his influence was a growing affront to the Communist Party.