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26 Jan 2021 9:32
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  •   Home > News > International

    Alibaba under investigation amid speculation over Jack Ma's 'disappearance'

    Chinese regulators have launched an investigation into China's biggest e-commerce giants Alibaba, cofounded by Jack Ma, who hasn't been seen since October.

    Chinese regulators have launched an investigation into China's biggest e-commerce giant Alibaba, cofounded by Jack Ma, one of the country's richest men.

    The State Market Supervision Administration issued a one-line statement on Christmas Eve that it had filed an antitrust investigation into Alibaba Group Holdings Ltd over their "suspected monopolistic practices".

    It also fined the company half a million yuan ($99,000) 10 days earlier for breaching anti-competition law.

    The probe saw the online shopping and cloud computing giant's stock price plummet and its market value evaporate.

    It comes as speculation is swirling about Mr Ma, who hasn't been seen in public since shortly after he gave a controversial speech in late October.

    Why is Alibaba under investigation?

    So far, China's market watchdog has given few details.

    But it specified one of Alibaba's so-called "choosing one from two" policies, a practice of requiring merchants to sign agreements that restrict vendors from selling products on other platforms, would be investigated.

    In an interview with Chinese media, the dean of the Institute of Finance of Zhejiang University, Jinchuan Shi, pointed out many hi-tech firms and online platforms use their huge economic influence to openly question and influence some of the country's major economic policies.

    Alibaba has been contacted for comment, but did not respond by deadline.

    Why is this significant?

    According to Dr Heling Shi, associate professor of the School of Business at Monash University, the Alibaba case"is one of the most important political and economic declarations on anti-monopoly [corporate behaviours]".

    This is the first time the top market regulator has gone after a well-known domestic hi-tech giant, in a move some commentators describe as "killing a monkey to scare the chickens" — a play on the Chinese expression to make an example of something.

    Most Chinese antitrust cases in the 12 years since China's anti-monopoly law came into effect have targeted the pharmaceutical industry and municipal water utilities, according to the South China Morning Post.

    Dr Yongqiang Li, a senior lecturer at the School of Law at the University of Victoria, agrees with China's approach, highlighting that small and medium-sized businesses were hit hard by the development of digital markets.

    "It is argued that anti-competitive behaviours are problematic given that it is unfair to limit competition in a market," he said, adding government intervention was needed to prevent monopolies.

    He said hi-tech companies had enjoyed years of regulatory complacency.

    "Such happy times may soon come to an end when the Government acts proportionately to the risks that these companies are creating to the market and to the whole of society," he said.

    Melbourne-based BMYG chief investment officer Julius Wei said that China's internet giants needed to be heldaccountable to prevent exclusive market domination.

    "For years, Chinese hi-tech firms believed they were on the moral high ground by providing convenience and efficiency to day-to-day life," he said.

    "However, the fact of the matter is high-tech companies are more likely to form a monopoly by killing off many offline brick-and-mortar stores."

    Jack Ma is speculated to be missing. How is this related to the probe?

    Jack Ma shot to prominence after the success of Alibaba — sometimes described as "the Amazon of China" — with an origin story that includes him being rejected for every job he applied for after college, including one at KFC.

    Forbes lists the Chinese tech billionaire's net worth at $US58.1 billion ($75 billion), making him the second richest man in China and the 20th richest person in the world.

    In September 2019, Mr Ma stepped down from Alibaba as chairman, but he was long seen as the public face of the company and he remains its biggest individual shareholder.

    He is also the cofounder of Ant Group, an affiliate of Alibaba. The ABC has approached Ant Group for comment.

    But Mr Ma hasn't been seen in public for more than two months, and his last appearance seems to be on October 31, at a live-streamed Alibaba opening gala to launch Singles Day, the world's largest shopping event.

    He reportedly missed the grand finale of his own reality TV series, Africa's Business Heroes, despite his role as a chief judge on the show and saying in a social media post that he was looking forward to the event.

    Rumours are spreading fast and wide on Chinese social media platforms about where he is, as his apparent disappearance follows a controversial speech he gave at a summit on October 24.

    In the speech, Mr Ma launched a blistering public attack on the country's financial watchdogs and banks, saying that "China's financial sector basically doesn't have a system".

    Chinese banks, he said, operated with a "pawnshop" mentality.

    "We cannot use the way to manage a railway station to manage an airport," he said.

    Days later, in early November, four Chinese regulators summoned Mr Ma for questioning.

    Soon after, Ant Group's highly-anticipated initial public offering (IPO) — its planned launch on the Shanghai and Hong Kong stock exchanges — was suspended by watchdogs.

    A point of no return?

    Mr Ma would be far from the first high-profile person to go missing in China.

    Fan Bingbing, one of China's highest-paid actors, was whisked away in June 2018, resurfacing more than 100 days later in October that year.

    But a report from CNBC, citing unnamed sources, claims he is "lying low", not missing.

    Mr Wei said Mr Ma's speech marked "the point of no return for him".

    "As a financial practitioner, I feel he missed the point. The [international banking and finance governing system] Basel Accords is not as what he described as an out-of-date system for online payments," he said.

    "I think financial innovation does not mean finding loopholes in regulation, creating a kind of financial innovation that seems to bring huge profits and income without responsibility on risk management. This created unfair competition."

    Monash University's Dr Shi said the situation facing Jack Ma, Ant Group and Alibaba was inevitable.

    "The water is much deeper. The Ant Group poses a big challenge to the entire Chinese banking industry," he said.

    "China's banking industry is actually a state monopoly, and there are many interest groups behind it.

    "This is the main reason for Jack Ma's downfall, because he moved somebody's cheese," he added, using a Chinese expression meaning to step on someone else's toes.

    © 2021 ABC Australian Broadcasting Corporation. All rights reserved

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