We’ve got another piece of news here about antitrust enforcers in the IT sector. Surprisingly but this time it’s not Google or Facebook, and even has nothing to do with American regulators. Today, we’ll go to China and see what exactly Alibaba Group is being accused of.
What’s going on?
On December 24th, The Wall Street Journal reported that the Chinese State Administration for Market Regulation (SAMR) initiated an antitrust investigation against Jack Ma’s company and recommended him not to leave the country.
The Chinese internet empire is accused of exerting pressure on merchants that sell their goods on trading site owned by Alibaba Group. Allegedly, the corporation forced merchants to sign the agreement that forbids them selling on other platforms.
And that was not the end of the story! According to Bloomberg, one of these days Chinese regulators are going to meet the management of Ant Group, Alibaba Group’s subsidiary fintech company. Unfortunately, no detailed information about the forthcoming meeting has been announced yet.
We remind you that Ant Group was planning to file for an IPO and make history. However, due to the changes introduced to microlending regulation by the People's Bank of China, the largest global IPO failed.
What about Alibaba Group shares?
Amid this investigation-related news, shares of the Chinese IT giant dropped significantly on December 24th and lost about 13.34 %. The price of one share went from $256.18 to $222.
Such a drawdown influenced the entire Chinese market: индекс The SSE Composite Index dropped to 3,363.11 points by losing 0.57%, while the CSI 300 Index reduced by 0.14% down to 5,000.02 points. The property price and consumer goods indices lost 0.72 % and 0.64 % respectively, while the financial sector sub-index was down by 0.21 %.
Chinese antitrust authorities started an investigation against Alibaba Group. Before that, Chinese financial regulators ruined Ant Group IPO on Shanghai and Hong Kong Stock Exchanges.
All this suggests that there might some kind of political pressure on Jack Ma’s empire. However, according to Bloomberg, the activities of Chinese state authorities aren’t against the entrepreneur himself.
To a considerable degree, they are seeking to press the country’s IT sector that has been developing at hypervelocity. Authorities don’t like the extension of the influence of technology corporations, which, in their opinion, may become a threat to financial and political stability in the country.
Anyway, we’ve got an incredibly interesting story that is just beginning. What other steps will the Chinese regulators take to retain control over the IT sector? We’re about to find out soon.