Business

Ma warned that no one is bigger than the Party with Alibaba case

A major investigation into China’s digital dragon has been announced by the state regulator

Jack Ma is paying a high price for daring to criticize the Communist Party after China launched an antitrust investigation into Alibaba.

The 56-year-old founder of the sprawling tech giant has come under fire for his outspoken views on the future of e-commerce technology after taking a metaphorical machine gun to the regulatory old guard.

His comments last month forced Alibaba to pull the plug on what would have been a record-breaking US$37 billion initial public offering of affiliate Ant, the e-wallet and digital financial behemoth.

“It would be a tragedy if the antitrust law should be seen as ‘targeting’ successful private tech companies only,” Fred Hu, the chairman of Primavera Capital Group and an Ant investor, said as reported by the Reuters news agency.

The facts:

  • The State Administration for Market Regulation announced the investigation on December 24.
  • It will look into “monopolistic practices,” including Alibaba’s tactic of forcing merchants to sell exclusively on its internet platforms.
  • This is known as “pick one of two” in China, giving the company online rights to sell products from fashion to food.
  • The antitrust inquiry is one of the first of its kind in the world’s second-largest economy after deliberately ring-fencing the e-commerce sector from foreign competition.

What was said: The State Administration for Market Regulation issued a short statement, saying the investigation would revolve around “forced exclusivity.” The People’s Daily, the official newspaper of the Communist Party, went even further in an editorial. “Antitrust has become an urgent issue concerning [China’s] overall situation … our country [needs] to strengthen supervision of the internet sector. Fair competition is the core of the market economy… [monopolies] distort [the] allocation of resources, harms the interest of market players and consumers, and kills technological advancement,” it stated.

What was Alibaba’s response: In a statement, the company that Jack built said: “Alibaba will actively cooperate with the regulators on the investigation. Company business operations remain normal.” 

Reaction to the news: “[Regulators] definitely have evidence but it is hard to say whether they will ultimately decide this constitutes monopolistic behavior,” Yu Jianhua, of the DeBund Law Offices in Shanghai, told the Financial Times.

China Factor comment: Even since Ma made a highly-inflammable speech at the Bund Summit 2020 in Shanghai, he has become a target of President Xi Jinping’s government. In November, he called the “financial system” a “legacy of the Industrial Age” and described traditional banks as “pawnshops.” The remarks infuriated the ruling CCP even though Ma is a Party member and effectively curtailed Ant’s IPO. Beijing is also worried by the stranglehold that Alibaba and Tencent have on the online landscape and the broader economy after creating these monster digital dragons. Like Washington’s antitrust row with Google and Facebook, Beijing is growing increasingly uneasy with Alibaba’s vice-like grip on e-commerce. Xi’s administration is also making a political statement that no company or person is bigger than the CCP. And that includes Ma, despite his vast wealth of more than US$60 billion.

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