HONG KONG ¨C Since the Chinese authorities suddenly halted fintech conglomerate Ant Group¡¯s planned initial public offering in autumn 2020, its parent company, e-commerce king Alibaba, has been facing harsh regulatory scrutiny. On Christmas Eve, China¡¯s antitrust authority announced that it was investigating the firm¡¯s exclusive business practices. And Alibaba¡¯s founder, Jack Ma, recently eased concerns regarding his fate by appearing in public for the first time since last October, when he delivered a speech criticizing financial regulation in China.
The mere announcement of the investigation into Alibaba wiped more than $100 billion off the firm¡¯s market value overnight. Given the Chinese government¡¯s huge regulatory power, investors are rightly anxious about Alibaba¡¯s prospects. But the government¡¯s sudden and aggressive move against the firm also reveals much about the regulatory regime¡¯s weaknesses.
To be sure, the Chinese government has legitimate reasons to be vigilant toward the country¡¯s highly concentrated internet sector. By targeting superstar firms like Alibaba, China is following a global regulatory trend, with U.S. and European Union policymakers similarly vowing to impose tougher sanctions against monopolistic internet giants.
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