Alibaba falls as China tightens the screw
Alibaba falls as China tightens the screw. Yet, if you check, there is really nothing of significance happening. Whether antitrust probes or not, Alibaba will remain one of the winners in China's internet.
Alibaba sold off on Thursday’s news that the State Administration for Market Regulation (SAMR) was investigating the e-commerce company for monopolistic practices. As we mentioned Thursday, merchants have to choose between selling goods on Alibaba and on its archrival Tencent’s ecosystem, which includes JD.com and Pinduoduo. If you choose Alibaba, then you are not allowed to sell on its rivals’ platforms. That is going to change. Furthermore, Tencent’s mobile payment service WePay is not accepted on Alibaba’s ecosystem. That is going to change. These changes are unlikely to have a material effect on Alibaba as the network effect the company has generated will continue to attract and keep merchants.