Breaking: Alibaba stock reportedly closed down 13.4%, wiping off approximately $100 billion from its market cap after the Chinese Communist Party (CCP) said it would open up an antitrust investigation into the tech giant.
Editorial Note: Communist China kicked off an investigation into alleged monopolistic practices at Alibaba Group Holding Ltd. It summoned affiliate Ant Group Co. to a high-level meeting over financial regulations, escalating scrutiny over billionaire Jack Ma’s internet empire.
Mr. Lu De believes that the CCP orchestrated this in response to the Foreign Corporation Holding Act that President Trump just signed, showing the U.S. that Alibaba has 100% no ties to the CCP.
The CCP could demand a spin-off of the Chinese Internet giant and then provide the new company with the best, auditable information to keep it in the U.S. market. In China, corporate spin-off means nothing because it has no effect on the CCP families that control it. Later, Tencent, WeChat, and other U.S.-listed Chinese companies will follow suit.
Plus, if Jake Ma, a member of CCP, “persecuted” for this, he could “flee” China to ask for political asylum from the U.S. or other countries and then continue to work for the CCP overseas. This is a common CCP tactic to send agents to foreign countries.
When Alibaba was about to face the fate of delisting, it was investigated by the Chinese Communist government in the name of anti-monopoly, with only one purpose: both sides acted in a play to preserve Alibaba’s listing status. Specifically, the CCP pretended to investigate so that Alibaba would have the evidence needed in a U.S. court to prove that it was not controlled by the CCP government. If those investigative evidences are still not enough, the CCP may conduct a fake split of Alibaba, divest fake or non-compliant businesses and assemble a compliant-looking company to keep Alibaba’s listing status. Now the BBC, CNN, and other left media are trumpeting the investigation, intending to set the mood for the next trick the Communist Party will play.
The Americans probably can’t imagine that unlike their anti-monopoly investigations that would actually split up the company under investigation, while there is an absence of privatization of property in Communist China, any form of anti-monopoly investigation is an act for foreigners to watch. The investigation of a company is fake, the split is also fake, and the company before and after the split still belongs to one owner – the CCP. If this trick of Alibaba is successful, other Chinese stocks will adopt similar tricks next to keep their listing status.
China kicked off an investigation into alleged monopolistic practices at Alibaba Group Holding Ltd. and summoned affiliate Ant Group Co. to a high-level meeting over financial regulations, escalating scrutiny over the twin pillars of billionaire Jack Ma’s internet empire.
The State Administration for Market Regulation is investigating Alibaba, the top antitrust watchdog said in a statement without providing further details. Regulators including the central bank and banking watchdog will separately summon affiliate Ant to a meeting intended to drive home increasingly stringent financial regulations, which now pose a threat to the growth of the world’s biggest online financial services firm. Ant said in a statement on its official WeChat account it will study and comply with all requirements.
Once hailed as drivers of economic prosperity and symbols of the country’s technological prowess, Alibaba and rivals like Tencent Holdings Ltd. face increasing pressure from regulators after amassing hundreds of millions of users and gaining influence over almost every aspect of daily life in China.
Alibaba’s Hong Kong stock slid as much as 7.7% to a five-month intraday trough, while Tencent and internet services giant Meituan declined more than 1%. Shares in SoftBank Group Corp., Alibaba’s largest shareholder, erased gains to trade as much as 2.7% lower in Tokyo.
Investors are divided over the extent to which Beijing will go after Alibaba — Asia’s largest corporation after Tencent — and its compatriots as Xi Jinping’s government prepares to roll out a raft of new anti-monopoly regulations. The country’s leaders have said little about how harshly they plan to clamp down or why they decided to act now. Draft rules released in November give the government unusually wide latitude to rein in tech entrepreneurs like Ma, who until recently enjoyed an unusual amount of freedom to expand their empires.
“It’s clearly an escalation of coordinated efforts to rein in Jack Ma’s empire, which symbolized China’s new ‘too-big-to-fail’ entities,” said Dong Ximiao, a researcher at Zhongguancun Internet Finance Institute. “Chinese authorities want to see a smaller, less dominant and more compliant firm.”
The flamboyant Alibaba co-founder has all but vanished from public view since Ant’s initial public offering got derailed. As of early December, with his empire under regulatory scrutiny, the man most closely identified with the meteoric rise of China Inc. was advised by the government to stay in the country, a person familiar with the matter has said. Alibaba representatives weren’t immediately available for comment.
The country’s internet ecosystem — long protected from competition by the likes of Google and Facebook — is dominated by two companies, Alibaba and Tencent, through a labyrinthine network of investment that encompasses the vast majority of the country’s startups in arenas from AI to digital finance. Their patronage has also groomed a new generation of titans including food and travel giant Meituan and Didi Chuxing — China’s Uber. Those that prosper outside their aura, the largest being TikTok-owner ByteDance Ltd., are rare.
The anti-monopoly rules now threaten to upset that status quo with a range of potential outcomes, from a benign scenario of fines to a break-up of industry leaders. Beijing’s diverse agencies now appear to be coordinating their efforts — a bad sign for the internet sector.
The People’s Daily, the mouthpiece of the Communist Party, warned Thursday that fighting alleged monopolies was now a top priority. “Anti-monopoly has become an urgent issue that concerns all matters,” it said in a commentary coinciding with the probe’s announcement. “Wild growth” in markets needs to be curbed by law, it added.
The campaign against Alibaba and its peers got into high gear in November, after Ma famously attacked Chinese regulators in a public address for lagging the times. Market overseers subsequently suspended Ant’s IPO — the world’s largest at $35 billion — while the anti-monopoly watchdog threw markets into a tailspin shortly after with its draft legislation.
The chances that Ant will be able to revive its massive stock listing next year are looking increasingly slim as China overhauls rules governing the fintech industry, which in past years has boomed as an alternative to traditional state-backed lending.
China is said to have separately set up a joint task force to oversee Ant, led by the Financial Stability and Development Committee, a financial system regulator, along with various departments of the central bank and other regulators. The group is in regular contact with Ant to collect data and other materials, studying its restructuring as well as drafting other rules for the fintech industry.
“China has streamlined a lot of the bureaucracy, so it’s easier for the different regulatory bodies to work together now,” said Mark Tanner, managing director of Shanghai-based consultancy China Skinny. “Of all the regulatory hurdles, this is the biggest by a long shot.”