Alibaba shares drop after China opens antitrust probe
The Chinese market regulator yesterday issued new antitrust recommendations aimed at Internet platforms. The recommendations further tighten the existing restrictions faced by the country’s tech giants.
The new rules complement an earlier bill published in November and clarify a number of monopoly practices that regulators plan to eliminate..
These principles are expected to put new pressure on China’s leading internet services, including e-commerce sites such as Alibaba Group Taobao and Tmall. JD.com. They will also cover payment services such as Alipay and WeChat Pay..
Rules published by the Government Market Regulatory Authority (CAMR) prohibit companies from a range of actions, including forcing entrepreneurs to choose exclusively between the country’s leading Internet giants, which is a long-standing practice in the market..
The CAMP said that the bill is aimed at «stopping monopolistic behavior in the economy and protecting fair competition in the market».
The report also says that the regulator intends to stop restrictions on technological development, as well as the use of data and algorithms to manipulate the market..
Answering journalists’ questions, CAMP noted an increase in the number of complaints about antimonopoly behavior of large market participants.
«Finding violations is not easy. Internet giants secretly exploit data, algorithms, and legal loopholes that make it difficult to detect and determine monopoly actions», – said the regulator.
China has begun tightening its grip on the sector in recent months, abandoning a once liberal approach.
In December, regulators launched antitrust investigations against Alibaba Group following the scandalous cancellation of a $ 37 billion initial public offering by its payment partner Ant Group..
Shares of Chinese Internet Giants in Hong Kong were in different zones by the close of the market on Monday. Tencent rose 0.48% and Meituan 1.25%. JD.com decreased by 0.6%. Alibaba shares lost 0.62%.
Current movement of exchanges in stark contrast to the volatility seen in November, when Hong Kong stocks from China’s tech giants plummeted after the government’s initial announcement of regulation. Billions of dollars in market value disappeared from balance sheets amid this news.
Managing Director and Head of Research, Bank of Communications International Hao hong said the market needs time to digest the details of the latest antitrust guidelines, adding that Chinese internet giants have been in business for years and have long been «very durable» market position.
«The new law will not harm the market. Large players will continue to make profits, but small companies will also be able to gain their market share», – Hong believes.