China's tech-giant, Alibaba Group Holding Ltd, is being investigated by regulators on charges of monopolistic practices, the Chinese government announced Thursday. The probe marks the formal start of the Communist Party's crackdown on tycoon Jack Ma's sprawling dominion - from e-commerce to logistics and social media.
"Acting on information, China's State Administration for Market Regulation (SAMR) has started investigation on Alibaba Group for alleged monopoly conduct including implementing an 'exclusive dealing agreement'," China’s official news agency, Xinhua announced.
Just after this announcement, Alibaba shares fell nearly 9% in Hong Kong. The STAR Market dropped 2.1%, while the CSI TMT Index fell 1.5%, according to news agency Reuters.
Alibaba, the world’s biggest e-commerce company with hundreds of millions of users and billions of dollars in turnover, was started by 56-year-old Jack Ma who was once a school teacher and later went on to become a multi-billionaire. Bloomberg calls Alibaba, Asia's 'most valuable corporation'.
The new investigation was preceded by the suspension of Ant’s planned IPO in early November, which was interpreted as an indication of the troubles ahead for the company.
Since September, the Communist government launched a coordinated regulatory crackdown, which in November scrambled the Ant public offering and, together with tough new antitrust rules, triggered about 140 billion dollars or 17% decline in the market value of Alibaba.
Separately, the People's Bank of China, the China Banking Regulatory Commission and China Securities Regulatory Commission will also meet affiliate Ant Group for 'supervisory and guidance' talks.
In a strongly worded editorial, in the People’s Daily, the largest newspaper group in China, it said, "If monopoly is tolerated, and companies are allowed to expand in a disorderly and barbarian manner, the industry won't develop in a healthy and sustainable way."
