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Alibaba

Sven
in Fund Discussions
Alibaba, a top holding in many emerging market funds. In recent weeks, EM funds have been volatile and declining a bit while the rest of the world are moving upward. This is one of the few time the Chinese government is fining one of its own stocks.
Feb. 7: China’s market regulator releases new anti-monopoly guidelines targeting internet platforms, further tightening restrictions on the country’s tech giants.

March 2: Ant is working on measures to help staff with “short-term liquidity problems”, internal staff messages from executive chairman Eric Jing show, after the IPO suspension dashed employees’ hopes of cashing in their shares.

March 12: Ant CEO Simon Hu unexpectedly resigns, the first top management exit since the scuppered $37 billion IPO.

March 18: Chinese regulators say they have Alibaba, Tencent, TikTok owner ByteDance and nine other technology companies for talks on use of “deepfake” technologies on their content platforms, stepping up scrutiny of the sector.

April 10: Regulators say they have fined Alibaba $2.75 billion for violating anti-monopoly rules and abusing its dominant market position, China’s highest antitrust fine ever.
https://reuters.com/article/us-china-alibaba-timeline/events-leading-up-to-chinas-2-75-billion-fine-on-alibaba-idUSKBN2BX04W?il=0

Comments

  • CrashCrash
    They did the same thing Microsoft does, pre-installing Windows. That's what you get. Or else you can go buy a Mac, at a higher cost. But Microsoft has market dominance, and so they throw their weight around. You have a choice in what to buy. But not really. And Windows has time and time and time and time and time again, proven itself to be inferior crap which attracts malware and viruses like a magnet.
  • MikeMMikeM
    Hi @Crash. Just an FYI, Alibaba is not in the same business as Microsoft and not really comparable. It is more akin to Amazon, but maybe even bigger and more diverse. Because of Alibaba's growing wealth and social influence, the Chinese gov decided to let them know who was boss. Hence, they drove the stock down. Very recently. a huge fine was issued by the gov, 2.8 Bil. Hopefully that will end the feud and the stock goes back to it's growth pattern.

    I've invested in Alibaba (BABA) since 2014 on and off. It has been very very good to me, albeit in pretty small bets.
  • Sven
    edited April 2021
    The fine is aimed at the monopoly practice that Alibaba is practicing, not the type of business. Alibaba must not discourage or block other BTB companies when offering the same products or services to the consumers. That is considered anti-competitive practices. There must be more details on Alibaba that the public have not seen.

    In the past, Microsoft was fine multiple times in Europe and US when they tied the Windows operating system to the Internet Explorer browser while they are other third party browsers, i.e. Netscape and few others. Microsoft went as far as crippling third party browsers and making them inoperable. I personally like Firefox and later Goggle Chrome for their speed and connectivity. After the court ruling, Microsoft has to sell their OS with debundle browser and allow the consumer to choose their preferred browser. Today Windows 10 OS can run multiple browsers including their own new ones, Edge and Blue Edge.

    More info:
    Beijing wants Alibaba to stop requiring merchants to chose between doing business with it and rival platforms, a practice known as ‘merchant exclusivity’, which critics say helped it become China’s largest e-commerce operation.

    Aside from imposing the fine, among the highest ever antitrust penalties globally, the State Administration for Market Regulation (SAMR) ordered Alibaba to make “thorough rectifications” to strengthen internal compliance and protect consumer rights.

    “The required corrective measures will likely limit Alibaba’s revenue growth as a further expansion in market share will be constrained,” said Lina Choi, Senior Vice President at Moody’s Investors Service.

    “Investments to retain merchants and upgrade products and services will also reduce its profit margins.”

    SAMR said it had determined Alibaba, which is also listed in New York, had prevented its merchants from using other online e-commerce platforms since 2015.

    The practice, which the SAMR has previously spelt out as illegal, violates China’s antimonopoly law by hindering the free circulation of goods and infringing on the business interests of merchants, the regulator said.

    The probe comes as China bolsters SAMR with extra staff and a wider jurisdiction amid a crackdown on technology conglomerates, signalling a new era after years of laissez-faire approach.

    The agency has taken aim recently at China’s large tech giants in particular, mirroring increased scrutiny of the sector in the United States and Europe.

    https://reuters.com/article/us-china-alibaba/alibaba-shrugs-off-2-75-billion-antitrust-fine-shares-rally-idUSKBN2BZ01P

    Alibaba's anti-trust practice is no differ than those practices used by Standard Oil and AT&T (MaBell) before the breakup into smaller business units.
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