We’ve got another piece of news about the fight against monopoly in the tech sector. Surprisingly, this time it’s not about Google or Facebook, or even about American regulators. Today we will be transported to China and discuss exactly what the Alibaba Group is accused of.
On December 24, The Wall Street Journal published an article that the State Agency for Market Regulation (SAMR) initiated an antitrust investigation against Jack Ma’s company. The regulators advised the businessman himself not to leave the country.
The Chinese internet empire has been accused of putting pressure on entrepreneurs who sell their wares on Alibaba Group’s online marketplaces. Say, the corporation forced sellers to sign an agreement prohibiting trading on other platforms.
The story doesn’t end there! According to Bloomberg, in the coming days, Chinese financial regulators will meet with the management of Ant Group, a subsidiary of the fintech structure of the Alibaba Group. Unfortunately, more detailed information about the upcoming meeting is not yet available.
Let us remind you that on November 5, Ant Group was supposed to go public and go down in history. However, due to changes in the rules of the Central Bank of China concerning microcredit regulation, the world’s largest IPO fell through.
What about Alibaba Group stock?
Amid the spread of news about the investigation on December 24, the securities of the Chinese IT giant showed an impressive 13.34% drop. The share price fell from $ 256.18 per unit to $ 222.
This drawdown was reflected in the entire Chinese market: the Shanghai Composite index fell to 3,363.11 points, losing 0.57%, and the CSI300 dropped by 0.14%, to 5,000.02 points. The real estate index was down 0.72%, the consumer goods sector was down 0.64% and the financial sector sub-index was down 0.21%.
Summing up the result
The antimonopoly authorities of the Celestial Empire have launched an investigation into the Internet corporation Alibaba Group. Prior to this, through the efforts of China’s financial regulators, Ant Group’s IPO on the Shanghai and Hong Kong stock exchanges was disrupted.
All this suggests thoughts of some kind of political pressure on Jack Ma’s empire. However, according to Bloomberg, the actions of the Chinese government are not directed against the entrepreneur himself.
To a greater extent, the goal is to put pressure on the IT sector that is developing at a space pace. The authorities do not like the growing influence of technology corporations, which, in its opinion, can become a threat to the financial and political stability in the country.
In any case, we have an interesting story that is just beginning. What other steps will the PRC leadership decide to take to maintain control over the technology sector? We’ll find out soon.