China is not happy with Alibaba, and has opened an antitrust investigation on the retail platform. Last month, due to government moves, the IPO of Ant Group, an affiliate of Alibaba, was cancelled.
China kicked off an investigation into alleged monopolistic practices at Alibaba Group Holding Ltd. and summoned affiliate Ant Group Co. to a high-level meeting over financial regulations, escalating scrutiny over the twin pillars of billionaire Jack Ma’s internet empire.
The probe announced Thursday marks 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 to a broader effort to rein in an increasingly influential internet sphere: Draft anti-monopoly rules released November gave the government wide latitude to restrain entrepreneurs who until recently enjoyed unusual freedom to expand their realms.
China is looking for order, but I do think that Chinese leaders are not comfortable that Jack Ma is the face of modern China to the world. Yes, if you visit China, and they ask you who you would like to meet, many would surely prefer to meet the founder of Alibaba over the communist party men. I still think that may be, partly, the reason why Jack Ma had to leave the company he started, prematurely.
The world is watching to see how the antitrust sphere will play out in China. Possibly, some countries can use that against some Chinese companies which have become extremely dominant in some developing countries. Yet, curtailing platforms may not be easy, but in China, it could come via a fiat mandate, and that is why BABA shareholders should be worried in New York. Google will have an independent court to make its case, on its antitrust probes, but BABA may not be that lucky in China.
Simply, China can destroy massive value for Chinese firms listed in New York. If you are invested in them, shine your eyes.
The countdown to the United States’ Department of Justice’s decision to file a lawsuit against Google, over anti-competition practices was followed by a series of antitrust investigations involving US big tech companies.
Google, Facebook, Apple, Microsoft and Amazon are all in the list. As the investigations uncover evidence of antitrust and anti-competition practices, the US regulatory agencies wield a sledgehammer toward the bottom-line of the inquiries – a possible breakup of the big techs.
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