The probe is part of an accelerating
crackdown on monopolistic behaviour in China's booming Internet space, and the
latest setback for Ma, the 56-year-old former school teacher who founded
Alibaba and became China's most famous entrepreneur.
It follows China's dramatic suspension last
month of Ant's planned $37 billion initial public offering, which had been on
track to be the world's largest, just two days before shares were due to begin
trading in Shanghai and Hong Kong.
In a strongly worded editorial, the ruling
Communist Party's People's Daily said that if "monopoly is tolerated, and
companies are allowed to expand in a disorderly and barbarian manner, the
industry won't develop in a healthy, and sustainable way".
Shares in Alibaba fell nearly 9 percent in
Hong Kong on Thursday morning.
Regulators have warned Alibaba about the
so-called "choosing one from two" practice under which merchants are
required to sign exclusive cooperation pacts preventing them from offering
products on rival platforms.
The State Administration for Market
Regulation (SAMR) said in a statement on Thursday that it had launched a probe
into the practice.
Financial regulators will also meet with
Alibaba's Ant Group fintech affiliate in the coming days, according to a
separate statement by the People's Bank of China on Thursday, casting another
cloud over a potential revival of the share sale.
The meeting would "guide Ant Group to
implement financial supervision, fair competition and protect the legitimate
rights and interests of consumers," the statement said.
Ant said it had received a notice from
regulators and would "comply with all regulatory requirements".
Alibaba said it would cooperate with the
investigation and that its operations remained normal.
Fred Hu, chairman of Primavera Capital
Group, an Ant investor, said global markets would be watching closely to see
whether the moves are "politically motivated or genuine impartial law
enforcement", and whether regulators target only the private sector but
not state monopolies.
"It would be a tragedy if the
antitrust law should be seen as 'targeting' successful private tech companies
only," he said.
Intensifying clampdown
Last month, Beijing issued draft rules
aimed at preventing monopolistic behaviour by internet firms, marking China's
first serious antitrust move against the sector.
China's Politburo this month vowed to
strengthen anti-monopoly efforts next year and rein in "disorderly capital
expansion".
China also warned Internet giants this
month that it would not tolerate monopolistic practices and to brace for
increased scrutiny, as it slapped fines and announced probes into mergers
involving Alibaba and Tencent.
In China, Alibaba's main e-commerce
platform competes with rivals including JD.com and Pinduoduo.
State media expressed support for the
regulators.
"Fair competition is the core of the
market economy" while monopoly "distorts allocation of resources,
harms the interest of market players and consumers, and kills technological
advancement", the People's Daily said.
China's internet sector had benefited from
the government's support for innovation, but the industry must abide by rules
and laws, it added.
Regulators have also become increasingly
uncomfortable with parts of Ant's sprawling empire, chiefly its most lucrative
credit business that contributed close to 40 percent of Ant's revenue in the
first half of the year.
Days before Ant's planned listing, top
financial regulators told Ma and two top executives that the company's
lucrative online lending business would face tighter government scrutiny, sources
told Reuters.
© Reuters