China Investigates Alibaba Over Monopoly Tactics
17% of the Market Value of Alibaba and Its Subsidiaries Have Declined
The Chinese tech giant firm Alibaba is currently being thoroughly under investigation by the regulating authorities over the usage of monopoly tactics to win in the increasingly competitive marketplace. The State Administration for Market Regulation of China (SAMR) has made a public announcement on Tuesday regarding the ongoing inquiry over the usage of monopoly tactics by Alibaba to limit their dominance over the Chinese market.
Monopoly tactics followed by Alibaba
The regulating authority in the concerning matter has previously given several warnings to the tech firm regarding enforcement of exclusive deals and contracts over the merchants as an attempt of monopoly tactics, which prevents them from providing their products to other rival firms that consequently limit their sales and revenue. The regulators of the financial matters will be conducting a meeting in the upcoming days with the Ant Group, which is the financial technology offshoot for the tech firm Alibaba.
The monopoly strategy and tactics, along with their behaviors that are investigated by the concerned authorities, only allow the merchant to choose one out of two practices. The approval for the monopoly tactics requires the seller to sign an exclusive pact for cooperation, which prevents the selling party from offering all of their products to another rival firm, which consequently results in a limited number of sold items and profit for the merchant.
The tech giant firms located in China, which includes companies like Tencent and Alibaba, have recently been under intense scrutinizing from the government of China, after multiple concerns regarding the rapidly increasing power and size in China and other countries around the world along with usage of monopoly tactics with their selling parties.
These firms have successfully been able to gain millions of people as their active users in a small amount of time due to their reliable services and now have a major influence over the daily lives of residents across China, which includes shopping services and easy payment options.
Due to the inappropriate monopoly tactics followed by Alibaba, the founder of the tech giant firm Jack Ma, has already experienced wrath from the regulating authority after a coordinated, concentrated effort over his firm.
During the previous month, the sub-company owned by Alibaba named Ant Group, which was previously known as Alipay, was forced to stop their listing in the stock market, which if it would have been done successfully, could possibly have been the biggest launch across the world.
The regulators assigned to the case against Alibaba for monopoly tactics made a sudden decision to block the Initial public offering of the firm just a few days before the grand launch after the concerns were raised regarding their micro-lending services. Although, it is believed by many people that the main reason behind the loss suffered by the tech firm was the public statement given by Jack Ma in the last days of the month of October, which was in criticism against the banking system and regulating authorities of China.
The tech billionaire, Jack Ma, stated that the banks located across China operate with the general population with a pawnshop mentality; now it is believed by some people that he might be paying the price for those specific comments while being investigated for having monopoly tactics.
Since then, a new regulation regarding antitrust has been introduced across the entire tech sector to prevent any illegitimate activity, which has also triggered a massive decline in the market value of the tech firm Alibaba of about $140 billion that is around 17% of the company’s worth.
Clampdown of Ant Group
According to a public statement given by the People’s Bank of China, the conference meeting held with the Ant Group was regarding guiding the firm for the implementation of supervision over their financial matters, fair competition, and protection of legalized interests and rights of their millions of customers, after concerns regarding their monopoly empire tactics.
Following the public notice of the regulating authorities of China, the Ant group gave a statement that they will be thoroughly studied the new regulatory measures that have been provided by the regulators along with full commitment and efforts to fulfill all the required efforts in relation to their work.
The government of China has recently become concerned regarding the components of the sprawling empire of the Ant Group, particularly interested in their profitable credit business and advanced monopoly tactics followed by the firm.
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