Chinese regulators have launched an antitrust investigation against Alibaba and called for talks with its internal financial arm, Ant Group – growing pressure on an e-commerce company founded by Chinese technology entrepreneur Jack Ma.
On Thursday, the state market surveillance administration said it had launched an investigation against Alibaba Group Holdings Ltd over “suspected monopolistic practices”.
The National Bank of China, the Chinese Banking Regulatory Commission, the Chinese Securities Regulatory Commission and the State Foreign Exchange Administration have announced that they will also meet with the Ant Group for supervision and management talks. Ant Group is the developer of AliPay, a mobile payment system that is now ubiquitous and largely necessary in the Chinese economy.
Ant Group said it would “study diligently and strictly adhere to the requirements of regulatory departments.”
Shares of Alibaba fell 5.48% on the news shortly after the Hong Kong Stock Exchange opened on Thursday morning.
Regulators have previously warned Alibaba of the so-called “one-of-two” practice, where traders must sign exclusive co-operation pacts that prevent them from offering products on competing platforms.
An editorial in the People’s Daily’s state gazette said efforts to prevent monopolies and anti-competitive practices were “conditions for improving the socialist system of a market economy and promoting high-quality development.”
“This investigation does not mean that the country’s attitude towards encouraging and supporting the platform economy has changed.”
Beijing is trying to regain the growing dominance of Alibaba and internet conglomerate TenCent.
In November, Ant Group, Ant Financial and Alipay were preparing for what could be the world’s largest initial public offering if Beijing suddenly closed it, 48 hours before trading began in Shanghai and Hong Kong.
At the time, “changes in the regulatory environment for financial technology and other major issues” were to blame for the halt, but analysts interpreted the shock intervention as a warning to Mau, who publicly criticized regulators in a speech shortly before the IPO.
“The party has once again reminded all private entrepreneurs that no matter how rich and successful you are, you can pull the rug under your feet at any time,” wrote Bill Bishop, author of the Chinese bulletin Sinocism.
Additional reporting by Pei Lin Wu and agencies