Chinese regulators clamp down on Alibaba and eye Ant Group
- China's antitrust watchdog launched a probe into Alibaba's merchant policies, while financial authorities are looking into Ant Group's compliance standards.
- And these actions could hinder growth for the firms.
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Beijing's State Administration for Market Regulation announced the launch of an antitrust investigation against Alibaba, while Chinese finance regulators summoned Ant Group to discuss its compliance processes, per The Wall Street Journal.
Alibaba's antitrust probe stems from reports that it has allegedly been pressuring its merchants to sell exclusively on Alibaba and not on competitor sites like JD.com and Pinduoduo. Meanwhile, regulators are looking to meet with Ant Group to take a closer look at whether its payments platform, Alipay, and its online-lending model are compliant with laws.
Chinese government agencies have been taking aim at both firms—potentially hampering future growth. In November, amid Alibaba's coveted Single's Day event, regulators introduced a set of antitrust draft laws to prevent monopolistic behaviors from the country's large internet firms. And around the same period, Ant Group—which Alibaba owns a one-third stake in—had its IPO, which was slated to raise more than $34 billion, suspended by authorities, with some reports alleging that the halt came directly from President Xi Jinping.
If the current allegations against Alibaba are found to be true and regulators force Alibaba to loosen its grip on merchants, the company could lose some market share in China's ecommerce market—which is projected to have a value of $2.09 trillion in 2020—considering merchants would be able to freely sell on competitors' platforms.
And if Ant Group's practices with Alipay are found to be noncompliant with antitrust laws, it might need to contend with restrictions that could dampen its growth opportunities within the payments realm.
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