The Chinese government opened an investigation into the online trading giant for “suspected monopoly behavior”. After that, the company’s value fell 9% and it lost more than $ 100 billion.
5 min readThis story originally appeared at high level
The State Administration for Market Regulation (SAMR) in a statement announced that it is investigating Alibaba Group by “Suspicion of monopolistic behavior”. This caused the shares of China’s largest online trading platform to crash, which more than fell $ 100 billion.
The mysterious Chinese government has not released details of the antitrust investigation against the company founded by Jack Ma. They are only known to be related to their “choose one of two” policy. It can be said that it is an exclusive agreement to force dealers to only sell in Alibaba, Make sure they don’t do this on other competing platforms such as Tencent.
The announcement of the investigation caused the e-commerce giant’s shares to fall sharply. This monday, Alibaba lost 9% on the Hong Kong Stock Exchange, its lowest level since last June. The strong drops of the last two sessions translate into the $ 116 billion loss for the company.
China vs. Monopolies
The People’s Daily, a Communist Party newspaper that governs China, finds the investigation opposed Alibaba “It is an important measure for our country to strengthen antitrust supervision in the internet sector and to promote the healthy long-term development of the digital economy.”
“If the monopoly is tolerated and companies are allowed to expand in a disorderly and barbaric way, the industry will not develop in a healthy and sustainable way.”added the same medium.
https://t.co/sonWyBhs7e was faced with Covid-related disruptions at its customers in 2020 and used this as an opportunity to help #SMEs Become more agile as you do business around the world. pic.twitter.com/GLDhKDjzjn– Alibaba Group (@AlibabaGroup) December 23, 2020
Technical sources mention that the People’s Bank of China announced that “Financial regulators will meet with the Ant Group soon.”, financial arm of Alibaba and matrix of Alipay, its online payments department. The goal is to run the company “Financial supervision, fair competition and protection of the legitimate rights and interests of consumers”.
In a brief statement, Ant group confirms that you have received the meeting note. “We will seriously investigate and strictly adhere to all regulatory requirements and will make every effort to adhere to all related work.”said the company.
In early November, the government led the way Xi Jinping frustrated at the last minute Ant Group goes public. The IPO would be $ 34.5 billion, one of the highest in history.
Last week too Alibaba He received one Fine of around 75 thousand dollars, according to the New York Times due to failure to report an acquisition.
Why is Alibaba targeted by the Chinese government?
Several analysts point this out the Alibaba investigation, the obstacles to the Ant Group, and the fine would be a consequence of a speech by Jack Ma. Last October, the company’s founder, now retired, harshly criticized the Chinese financial system. at a forum in Shanghai.
I am honored to work with HRH The Duke of Cambridge @ KensingtonRoyal other global leaders and organizations in support of the @EarthshotPrize and address the environmental challenges we all face. Together we can protect our planet from climate change! https://t.co/0ax1imIZMC pic.twitter.com/EN6yissNGI– Jack Ma (@JackMa) October 10, 2020
He also a philanthropist He said the operating model of his country’s banks is like a pawnshop. He criticized that preventing systemic financial risk had led them to get lost and believed that the Basel Agreement banking supervision were out of date.
“There is certainly an escalation of coordinated efforts aimed at hampering Jack Ma’s empire, which symbolizes the new Chinese units too big to fail.”The agency-quoted analyst Dong Ximiao of the Zhongguancun Institute of Internet Finance (the “Beijing Silicon Valley”) Bloomberg.