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To: Glenn Petersen who wrote (752)3/11/2021 11:18:15 PM
From: Glenn Petersen
   of 795
 
China Lays Plans to Tame Tech Giant Alibaba

E-commerce company to face softer treatment than its Ant affiliate, provided it distances itself from founder Jack Ma

By Keith Zhai and Lingling Wei
Wall Street Journal
March 11, 2021 10:12 am ET

Under founder Jack Ma, Alibaba Group Holding Ltd. had regulators and local officials in its corner as it grew into a Chinese version of Amazon.com Inc. Chinese President Xi Jinping’s recent crackdown on the empire of China’s best-known entrepreneur has put an end to that.

Since late last year, Alibaba has been in Beijing’s crosshairs, along with its financial affiliate Ant Group Co. Regulators already have come down hard on Ant, which they consider a risk to the financial system, forcing it to make changes that will severely hamper its prospects.

Alibaba, though, appears destined for softer treatment. Officials familiar with Beijing’s thinking said regulators don’t want to crush a technology powerhouse popular with both Chinese households and global investors—as long as it disassociates itself from its flashy and outspoken founder and aligns itself more closely with the Communist Party.


Antitrust regulators are considering levying a record fine against Alibaba exceeding the $975 million that Qualcomm Inc. paid in 2015 over anticompetitive practices, so far the largest in China’s corporate history, according to people with knowledge of the matter.

Those people said Alibaba also will be required to end a practice that has been dubbed “er xuan yi”—literally, “choose one out of two”—under which, regulators believe, the tech giant punished certain merchants who sold goods both on Alibaba and its rival platforms, including JD.com. The precise remedies Alibaba will have to take likely will be hammered out only after a decision is announced, according to one of the people.



Alibaba founder Jack Ma retired as the company’s chairman in 2019.PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES
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In addition, regulators are weighing whether to require Alibaba to divest itself of some assets unrelated to its main online-retailing business. Once final, measures against Alibaba will need to be approved by China’s top leadership.

Alibaba now faces a two-pronged challenge: correcting the anticompetitive behavior alleged by regulators and adhering to the government’s political agenda. The pressure reflects Chinese leadership’s assertion of statist prerogatives over the economy, which could risk dulling the innovation and competitive spirit that powered China’s growth in recent decades.

Representatives for Alibaba declined to comment. China’s top market regulator, the State Administration for Market Regulation, didn’t respond to requests for comment.

While painful, none of the measures under consideration would come close to crippling the company, whose businesses include online retail, entertainment, media and cloud computing. Unlike Ant, which regulators viewed as a disrupter and a threat to the stability of the financial system Alibaba is considered the pride of China, a showcase for technology innovation that also is vital to the nation’s economy. Some 780 million Chinese consumers, or half of the country’s population, made purchases through the company’s platforms last year.

For a company that had net income of nearly $20 billion in its most recent fiscal year, a fine would allow it to throw money at a problem and move on. Some Alibaba executives said even a huge fine would be at least a provisional relief for a company battered by regulatory uncertainty and sinking employee morale.

Shares of Alibaba, which are listed in New York and Hong Kong, have lost more than $200 billion—roughly one-quarter of their market value—since the regulatory onslaught against Mr. Ma’s empire began late last year.

The crackdown comes as China’s leaders refashion their relationship with the country’s internet giants, whose troves of data, deep coffers and reach across all aspects of Chinese life have increasingly made them a national-security concern. Mr. Xi personally scrapped Ant’s initial public offering, The Wall Street Journal has reported, furious at Mr. Ma for criticizing his effort to limit financial risk in an October speech, and angered by the outsize payouts well-connected people stood to gain from the listing.



Chinese Premier Li Keqiang speaking at the opening session of the National People's Congress on March 5.PHOTO: KEVIN FRAYER/GETTY IMAGES
------------------------------
At the opening last week of China’s annual legislative session, Premier Li Keqiang declared that “the state supports the innovation and development of platform companies.” But Beijing also has another message for its tech giants: No matter how big or innovative they may be, they must align themselves with the state by championing causes such as poverty alleviation.

No More Special TreatmentMr. Ma, a fan of the writings of Mao Zedong, adopted the former leader’s tactics of playing localities and officials against each other, people close to him said. Over time, such methods became a liability for his businesses, said regulators and Alibaba employees.

The same day that government antitrust investigators marched into Alibaba’s headquarters in Hangzhou in December, city officials in a nearby government compound threw a large piece of cloth over the sign of a government arm established two years earlier specifically to assist the e-commerce giant.

It was an signal that the days of special treatment for Alibaba are over. Officials who have long been in Alibaba’s corner are telling the company it can no longer count on them, according to people close to Alibaba. One government meeting after another has been devoted to how to incorporate the new marching orders for preventing big tech firms from monopolizing credit and other resources.

The party boss of Alibaba’s home province, Zhejiang, has pledged to “strengthen antimonopoly efforts and prevent disorderly expansion of capital.” Other top party officials who had backed Mr. Ma in the past have echoed the message.



Alibaba’s headquarters in Hangzhou, China.PHOTO: QILAI SHEN/BLOOMBERG NEWS
-----------------------------
One was Chen Min’er, a rising political star who once urged regulators to treat Alibaba with “an open, forward-looking and innovative perspective.”

Zhejiang recently opened a channel to let local merchants report pressure from Alibaba to sell their goods exclusively on its Taobao and Tmall platforms, complaints that authorities until now had largely ignored.

The Zhejiang provincial government told the Journal that the sign for the office to assist Alibaba had been covered for renovation purposes, and that as a province that boasts vibrant internet-based businesses, it “attaches importance to improving the regulatory capabilities of the platform economy.”

‘Biggest Source of Instability’Inside Alibaba, some workers famous for their “996” hustle—a culture of working 9 a.m. to 9 p.m. six days a week—hover in limbo with little work as they await new company guidelines, according to Alibaba employees.

Some workers have started to question the way the company handled Ant’s IPO. Alibaba owns one-third of Ant, and many employees had hoped for a windfall from the stock sale. Some had even preordered cars or bid on property. While Ant Chairman Eric Jing has promised employees that the company will go public eventually, investors expect its valuation to be lower after a restructuring in line with regulators’ new requirements.

On Alibaba’s internal discussion board, some employees are openly calling Mr. Ma “the biggest source of instability” at the company.
Mr. Ma has sought to boost employee morale by saying it is common for a company to go through ups and downs. “At this time, there’s no shortage of emotions and accusations, but there’s a lack of calm, rationality and objectivity,” he said in a Feb. 27 post on the discussion board.

Mr. Ma’s personal office has suspended most interactions with an office under the party’s Central Committee that it used to be in regular contact with, according to people close to the company. Alibaba’s public-relations department has set up an office to fix a public image that many regulators have said they regard as arrogant.

Regulators’ anger at Mr. Ma’s modus operandi mounted in recent years. Depending on whom you ask, he and his tech employees were either fearless or clueless about the likelihood that their exploitation of regulatory gaps or challenges to Beijing would backfire.

In 2015, a few months after Alibaba went public on the New York Stock Exchange in what was then the world’s largest stock sale, China’s top market regulator criticized its efforts to eliminate counterfeit goods from its platforms. With support from local officials, Alibaba fired back publicly, calling the report flawed and sponsoring online articles condemning the agency’s “arbitrary methodology.”

Shortly afterward, the regulator removed the report from its website and described it as an internal memo, not an official document. After pressure from global brands, Alibaba in 2016 promised changes to how it tackled fake goods on its site.



Chinese President Xi Jinping personally scrapped Ant’s initial public offering, The Wall Street Journal has reported.PHOTO: LI GANG/XINHUA/ZUMA PRESS
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One early inkling that Mr. Ma was falling out of favor in Beijing came in late 2018, when Mr. Xi invited some 50 entrepreneurs to rebut criticism that his policies were hurting the private sector. The group included Pony Ma, founder of Tencent Holdings Ltd. , Alibaba’s rival and owner of the popular WeChat app; Robin Li, head of search engine Baidu Inc. ; and Lei Jun, co-founder of smartphone maker Xiaomi Corp.

Mr. Ma wasn’t invited, according to officials with knowledge of the arrangement.

Mr. Xi told the executives his government wanted to strengthen rather than weaken private businesses, according to state media reports. Excluded from the public readout of the gathering, the officials said, was a blunt message Mr. Xi directed at the tech chieftains: Commercial success is secondary to the mission of beefing up the country’s technological security.

Shortly after the meeting, Pony Ma of Tencent issued a statement pledging to shoulder the responsibility and mission of turning China into an “internet power.”

Both company employees and government officials point to a key moment in May 2020, when they felt a major shift in the government’s view on Alibaba. That was when China’s chief internet watchdog, the Cyberspace Administration of China, in a report to the leadership, said Alibaba had used “capital to manipulate public opinion,” according to officials who saw the report.

The report followed an incident in April on China’s Twitter-like platform Weibo. Speculation that an Alibaba executive was having an affair had sparked a torrent of posts, but in less than an hour some users started complaining their posts were being deleted—a practice common for politically sensitive posts but unusual for celebrity gossip.

The internet watchdog said Alibaba had directed the actions of Weibo, in which Alibaba holds about 30% stake, and that it had been told to stop influencing the media, according to the people who saw the report.

The incident further riled authorities and rivals who believe Alibaba is using its stakes in social-media and media firms and its public-relations department to lobby against government policies that affect its business. The Cyberspace Administration of China didn’t respond to requests for comment.

Softer ApproachDespite the government’s anger at Alibaba’s tactics, Beijing doesn’t want to cripple the company, according to people familiar with regulators’ thinking. With more than 110,000 employees, Alibaba features a fast-expanding artificial-intelligence business and is a leading Chinese provider of cloud storage—sectors seen as key to China’s future.

When regulators opened their antimonopoly probe of Alibaba, investigators told the company to ensure that the business kept running while the investigation was going on, according to people familiar with the instructions, because any break in service could affect Alibaba users around the world.

One sign of a measure of leniency toward Alibaba came earlier this year, before the company’s sale of $5 billion worth of bonds. Investors were worried that Mr. Ma had disappeared from public view after his October speech criticizing government regulatory efforts. Beijing wanted to reassure international investors that he was safe and sound, according to some officials.

In late January, Mr. Ma resurfaced in a video published online by Tianmu News, a subsidiary of the Zhejiang provincial government’s newspaper. He was shown speaking to rural teachers as part of a philanthropy event.

Alibaba successfully sold its bonds in early February. Part of the proceeds, the company said, would be used for projects involving “green buildings, Covid-19 crisis response, renewable energy”—all government priorities.

It also helps that Mr. Ma has gradually reduced his stakes in Alibaba, holding less than 5% as of July. He retired as Alibaba’s chairman in 2019, though he has maintained significant sway over the firm. He remains the controlling shareholder in Ant.



A video recording of Jack Ma speaking to rural teachers in late January.PHOTO: JUSTIN CHIN/BLOOMBERG NEWS
------------------------------
Alibaba still faces challenges. A data-security law could force it to feed consumer data to the central government. Tighter reins on Ant’s lending business would hurt Alibaba, too, as many customers make purchases with loans from Ant.

Alibaba has lobbied legislators in an effort to avoid divestitures, according to people with direct knowledge of the matter. Sales of noncore businesses would be easier to absorb for the company than anything in its core e-commerce operations.

On March 1, Study Times, a newspaper published by the elite Central Party School, published an interview with a former senior Zhejiang official, who attributed Alibaba’s success partly to Mr. Xi, who promoted information technology when he ran Zhejiang from 2002 to 2007, during Alibaba’s early days.

It is rare that a publication so close to the party’s center mentions a private-sector company at all, and to do so in direct connection to Mr. Xi suggested the company still matters to the leadership. There was no mention of Mr. Ma in the article.

Alibaba recently received a government certificate recognizing it as a “model” for Mr. Xi’s initiative to root out poverty, which Alibaba swiftly posted on its social-media account. Meanwhile, Mr. Ma was left off a list of business leaders compiled by government-controlled Shanghai Securities News.

The message was clear: Follow the party, not the man who founded the company.

Write to Keith Zhai at keith.zhai@wsj.com and Lingling Wei at lingling.wei@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the March 12, 2021, print edition as 'China Lays Plans to Tame E-Commerce Giant Alibaba.'

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To: Julius Wong who wrote (749)3/21/2021 2:50:23 PM
From: Glenn Petersen
   of 795
 
How Pinduoduo Beat Alibaba to Become China’s Top Shopping Site

Five-year-old company is first challenger to loosen Alibaba and JD.com’s stranglehold over online consumption in the country

By Trefor Moss
Wall Street Journal
March 20, 2021 5:30 am ET



Pinduoduo had 788.4 million users at the end of 2020, the company said, ahead of Alibaba’s 779 million. PHOTO: ORIENTAL IMAGE/CONNE
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SHANGHAI—A five-year-old e-commerce app that turned discount shopping into an online game has overtaken Alibaba Group Holding Ltd. BABA 1.42% as China’s most popular internet shopping site.

Pinduoduo Inc. PDD -0.01% had 788.4 million users at the end of 2020, the company said Wednesday in its quarterly earnings report, ahead of Alibaba’s 779 million, as measured by the number of people who made purchases over the past 12 months.

Though Pinduoduo’s annual revenue of $9.1 billion remains a fraction of Alibaba’s $72 billion from its last fiscal year, it almost doubled relative to 2019, cementing the Shanghai-based company’s status as the first challenger to loosen Alibaba and JD.com Inc.’s JD 1.30% stranglehold over Chinese online consumption.

“Together we’ve produced a minor miracle,” said Colin Huang, Pinduoduo’s founder and an ex-Google engineer, in a speech to staff, which was later published, at the company’s fifth birthday celebration at its headquarters in October. “We’ve changed Chinese e-commerce and even the structure of the Chinese internet.”

Pitching itself as an online blend of Costco and Disney, or a combination of value-based shopping and light entertainment, Pinduoduo has spearheaded China’s adoption of social e-commerce, a new incarnation of online consumption that combines shopping with social media and effectively turns shopping into a game.

On a platform designed to offer the digital equivalent of a stroll through a mall, users typically browse without having a particular purchase in mind.

The app—whose name roughly translates as “bringing lots of people together”—allows friends and strangers to band together and win deals for goods bought either individually or in bulk for a discount. With socializing foremost and shopping almost an afterthought, friends congregate on Pinduoduo to watch live streams, share deals and make purchases together, while playing the app’s built-in games.


One hit is “Duoduo Orchard,” where players nurture virtual fruit trees to earn shopping vouchers, tangible prizes such as boxes of mangoes and kudos from friends. The game sparks fierce rivalry among players, said Li Wenjun, a 19-year-old from Pingdingshan in central China who obsessively tends to her digital orchard.

“It’s so much fun when you do something together with your friends,” Ms. Li said. “You just have to commit time to it.”

Pinduoduo’s approach reflects the gamification trend in the tech sector, with stock-trading recently garnering attention. For Pinduoduo, keeping people on the platform is the games’ purpose: They help build user habits and serve as gateways into the site’s shopping areas.

Unlike older rivals born in the PC age, Pinduoduo is a native smartphone app without a desktop version or a shopping-basket function.

“Pinduoduo did one thing very well: We grasped the shift from searching to browsing” as a social activity, said Chen Lei, who took over as chief executive from Mr. Huang last year after serving as chief technology officer.



Pinduoduo founder Colin Huang, here in 2017, stepped down as chairman on Wednesday.PHOTO: QILAI SHEN/BLOOMBERG NEWS
----------------------------------
Mr. Huang also passed the role of chairman to Mr. Chen on Wednesday, stepping down to focus on research projects in life sciences, the company said. He remains Pinduoduo’s controlling shareholder. Shares dropped as much as around 11% in morning trade after the news of Mr. Huang’s departure.

Pinduoduo is on the rise as Alibaba contends with various challenges including an antitrust inquiry and increased government scrutiny. Alibaba has said it is cooperating with regulators on the probe and that it would reassess and improve its business practices.

Pinduoduo’s Nasdaq-listed shares have surged in value over the past year, and its market capitalization has surpassed rival JD.com’s, peaking around $250 billion in February. That increase propelled the 41-year-old Mr. Huang’s personal fortune to $69 billion, according to Shanghai-based research firm Hurun Report, making him China’s third-richest man, ahead of Alibaba founder Jack Ma.

Yet 2021 has also been Pinduoduo’s toughest year. The deaths of two young employees around the turn of the year exposed the company’s working culture to criticism.

“We are doing everything we can to support their families and loved ones,” Mr. Chen said. Pinduoduo has been providing counseling services to employees, he added.

And this month Chinese regulators fined Pinduoduo, alongside several other e-commerce companies, alleging harmful practices, as Beijing moves to rein in the country’s big tech companies.

In response to the fine, Pinduoduo said it attaches great importance to the government’s intervention and promised to address the issues.

The company lost $1.1 billion in 2020, though in its favor, China’s e-commerce market is still growing strongly. Online retail in the country could expand from $354 billion last year to $549 billion in 2025, according to research company eMarketer.

Pinduoduo’s marriage of e-commerce and social media took some refining.

In the summer of 2015, Mr. Huang and his team—then operating a forerunner to Pinduoduo that specialized in selling cut-price fruit—filled their sole warehouse near Shanghai with lychees, Mr. Chen said. They advertised them on WeChat, a popular Chinese messaging and social-media app, in one of their first big campaigns.

Swamped with orders, the company’s systems broke down, and it struggled to make most deliveries. The lychees turned rancid in the summer heat, forcing the company to refund thousands of angry customers.

“We were really humbled by this failure,” said Mr. Chen, who met Mr. Huang at the University of Wisconsin-Madison, where they both studied computer science two decades ago.

The managers held an inquest in the warehouse surrounded by the debris, he recalled, resulting in a decision to upend the business model. The company would no longer buy its own stock, but would become a third-party platform connecting merchants and consumers, much like Alibaba, while plowing investment into software, logistics and infrastructure to avoid a repeat of the debacle.

The episode did, however, validate Mr. Huang’s hunch that social media and e-commerce could be powerfully combined. Most people who bought lychees were told about the deal by their WeChat friends, who encouraged people in their circle to team up to buy large quantities at a discount.

Making its money from advertising, the company has spent nearly $13 billion subsidizing products, effectively paying merchants to lower their prices and offer eye-catching bargains.

To succeed long term, Pinduoduo—which, like JD.com, is backed by Alibaba’s rival, Tencent Holdings Ltd.—must figure out how to turn off the subsidies without losing an audience attracted in large part by bargains.

Pinduoduo’s plan was to keep plowing revenue back into subsidies until it supplants Alibaba as the default shopping platform for perhaps a billion Chinese consumers, according to Mr. Chen.

The company could then in theory throttle back the subsidies while attracting more advertising money from merchants to become consistently profitable.

But after a recent rebuke for its use of subsidies—a practice regulators attacked as distorting the market and damaging consumers’ interests—the company might have to adjust more quickly than it would have liked.

Another drawback of Pinduoduo’s game-led approach is that most consumers don’t spend much. Ms. Li, for example, uses it chiefly to buy cheap snacks and packets of tissues. The average Pinduoduo user spent $324 in 2020. That number has been increasing but is still less than a quarter of Alibaba’s average user spend.

To close the gap, the company is doubling down on fresh foods—which contribute 15% of its revenue—after raising over $6 billion last year to fund an ambitious agriculture program. Relatively untapped by e-commerce players, the fresh-food segment is one Pinduoduo wants to dominate because users potentially place orders every day.

Pinduoduo has shaken up Chinese e-commerce for the better as rivals vie to offer consumers bargains, said Cathy Shen, a Pinduoduo user from Anqing in eastern China. “It’s now become all-out warfare between the tech companies,” she said.

—Raffaele Huang contributed to this article.

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From: Glenn Petersen3/25/2021 6:26:22 AM
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SEC Starts Implementing Law That Risks Chinese Stock Delistings

By Benjamin Bain
Bloomberg
March 24, 2021, 11:12 AM CDT

-- Regulator takes initial step on requiring audit inspections

-- Alibaba, Baidu among firms under pressure from Washington

The threat of Chinese stocks being kicked off U.S. exchanges is gaining traction, with the Securities and Exchange Commission starting to implement a tough law passed at the end of the Trump administration.

In a Wednesday statement, the SEC said it’s taking initial steps to force accounting firms to let U.S. regulators review the financial audits of overseas companies. The penalty for non-compliance, as stipulated by the law Congress approved in December, is ejection from the New York Stock Exchange or Nasdaq for any business that doesn’t allow their audit to be inspected for three years.
China has long refused to let the U.S. Public Company Accounting Oversight Board examine audits of firms whose shares trade in America, citing national security concerns. U.S. lawmakers counter that such resistance risks exposing investors to frauds, while complaining that it makes little sense that Chinese companies have been permitted to raise money in the U.S. without complying with American rules.

The requirement that all public companies submit to PCAOB inspections of their audits was included in the 2002 Sarbanes-Oxley Act in the wake of the Enron Corp. accounting scandal. Alibaba Group Holding Ltd. and Baidu Inc. are among Chinese companies listed in the U.S. whose audit firms aren’t complying with the demand.

While the SEC was expected to start implementing the new law, Wednesday’s announcement signals that Biden-era financial regulators will continue their predecessors’ tough stance on China. The ongoing tension over audits comes as the world’s two-biggest economies continue to wrangle over issues ranging from security to trade.
In addition to requiring companies to allow U.S. inspectors to review their financial audits, the law requires firms to disclose whether they are under government control. The SEC’s announcement kick-starts that process by seeking public comment on the type of disclosures and documentation that firms will have to share.

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To: Glenn Petersen who wrote (756)3/26/2021 7:29:24 AM
From: Glenn Petersen
1 Recommendation   of 795
 
China’s dual-listed tech giants lost $60 billion in market value over three days as delisting threats loom

PUBLISHED FRI, MAR 26 20215:43 AM EDT
Eustance Huang @EUSTANCEHUANG
CNBC.com

KEY POINTS

-- As of their Friday close, the market value of Alibaba, JD.com, Baidu and Netease has fallen about $60 billion in just three days, based on CNBC calculations using data from Refinitiv Eikon.

-- The losses came as fears of potential delistings from U.S. stock exchanges resurfaced.

-- To exacerbate matters, China’s tech firms are also facing potential challenges domestically as Beijing seeks to regulate the sector and establish new rules in industries ranging from financial technology to e-commerce.

China’s dual-listed tech giants — Alibaba, Baidu, JD.com, and Netease — have collectively lost billions in market value in just days.

The losses come amid the threat of potential de-listings from U.S. stock exchanges.

As of Friday’s close in Hong Kong, the market capitalization of the four dual-listed tech stocks have fallen 468.64 billion Hong Kong dollars (about $60.31 billion) in three days, according to CNBC calculations of data accessed through Refinitiv Eikon.

Here’s a list showing how much each of the companies, which are also listed in the U.S., lost in terms of market capitalization.

Between Tuesday’s close to Friday’s close in Hong Kong:

Alibaba: Lost 303.1 billion Hong Kong dollars ($39 billion)
Baidu : Lost 107.54 billion Hong Kong dollars JD.com: Lost 30.674 billion Hong Kong dollars
Netease: Lost 27.334 billion Hong Kong dollars

Notable among them is Baidu, China’s largest search engine, which made a lackluster debut in its Hong Kong secondary listing on Tuesday. The shares ended flat on the first day of trading.

On Wednesday, the U.S. Securities and Exchange Commission (SEC) adopted a law that threatens to remove companies from the U.S. stock exchanges unless they comply with American auditing standards.

Known as the Holding Foreign Companies Accountable Act, the law was passed by the administration of former President Donald Trump.

Firms identified by the SEC will require auditing by a U.S. watchdog and need to show that they are not owned or controlled by a government entity in a foreign jurisdiction. Companies will also have to name any board members who are Chinese Communist Party officials, the SEC said in a Wednesday statement.

In addition to those regulatory uncertainties, China’s tech firms are also facing potential challenges domestically as Beijing tightens its grip on the fast-expanding sector and establishes anti-monopoly laws in financial technology and e-commerce.

Reuters reported earlier this week that Chinese tech conglomerate Tencent’s founder met with Chinese antitrust officials this month to discuss compliance at his group.

In a high-profile crackdown last year, the IPO of Ant Group — which was touted to be the biggest in the world — was abruptly suspended just days before its debut. The billionaire founder of Alibaba Jack Ma is the controller of Ant Group.

Beyond those concerns, the tech sector as a whole globally has also come under pressure as bond yields have risen. Rising yields hurt growth stocks, which many in the tech sector are part of, as they reduce the relative value of future earnings.

Furthermore, as optimism rises over a potential global economic recovery from the pandemic, investors may look to rotate their portfolios away from tech, and into other areas such as stocks that gain as the economy recovers.

— CNBC’s Arjun Kharpal contributed to this report.

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From: Glenn Petersen4/10/2021 6:28:55 AM
2 Recommendations   of 795
 
China slaps Alibaba with $2.8 billion fine in anti-monopoly probe

PUBLISHED FRI, APR 9 20219:53 PM EDT
UPDATED FRI, APR 9 202111:55 PM EDT
Christine Wang @CHRISTIIINEEEE
CNBC.com

KEY POINTS

-- Chinese regulators hit Alibaba with a 18.23 billion yuan ($2.8 billion) fine in its anti-monopoly investigation of the tech giant, saying it abused its market dominance.

-- The probe’s main focus was a practice that forces merchants to choose one of two platforms, rather than being able to work with both.

--The company said in a statement it accepted the penalty and will comply with the regulator’s determination.

Chinese regulators hit Alibaba with a 18.23 billion yuan ($2.8 billion) fine in its anti-monopoly investigation of the tech giant, saying it abused its market dominance.

Regulators opened a probe into the company’s monopolistic practices in December. The investigation’s main focus was a practice that forces merchants to choose one of two platforms, rather than being able to work with both.

In a Saturday statement, China’s State Administration for Market Regulation (SAMR) said this policy stifles competition in China’s online retail market and “infringes on the businesses of merchants on the platforms and the legitimate rights and interests of consumers,” according to a CNBC translation of a Chinese-language statement.

The government said that “choose one” policy and others allowed Alibaba to bolster its position in the market and gain unfair competitive advantages.

In addition to the fine, which amounts to about 4% of the company’s 2019 revenue, regulators said Alibaba will have to file self-examination and compliance reports to the SAMR for three years.

The company said in a statement it accepted the penalty and will comply with the SAMR’s determination. Alibaba said it fully cooperated with the investigation, conducted a self-assessment and already implemented improvements to its internal systems.

“Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development,” the company said.

The company added it will hold a conference call on Monday at 8 a.m. Hong Kong time to discuss the fine.

The announcement is the latest development in China’s crackdown on its technology companies. Regulators have been increasingly concerned about the power of China’s tech giants, particularly those who operate in the financial sector.

Much of that heightened scrutiny has sharpened around the business empire of billionaire Jack Ma, who founded both Alibaba and Ant Group.

Ant’s highly anticipated initial public offering was abruptly suspended in November shortly after Chinese regulators published new draft rules on online micro-lending, a key part of the company’s business. The China Securities Regulatory Commission also summoned Ma and other Ant execs ahead of that announcement.

Ma appeared to come under fire for comments that were critical of China’s financial regulator, saying the country’s financial system was “the legacy of the Industrial Age.”

After the Ant IPO was suspended, Ma dropped out of the spotlight, fueling speculation over his whereabouts. In January, the eccentric billionaire briefly reappeared in a video as part of one of his charity foundation’s initiatives.

Ant has since committed to listing and said it would help employees monetize shares.

— CNBC’s Arjun Kharpal, Evelyn Cheng and Eunice Yoon contributed to this report.

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To: Glenn Petersen who wrote (758)4/10/2021 11:21:56 AM
From: Sr K
   of 795
 
WSJ coverage is similar

Alibaba Hit With Record $2.8 Billion Antitrust Fine in China

Penalty comes amid regulatory scrutiny on business empire of Alibaba founder Jack Ma


Alibaba Group is being fined a record amount following an antitrust investigation by Chinese authorities.PHOTO: THOMAS PETER/REUTERS

By
Keith Zhai

Updated April 10, 2021 1:22 am ET

China’s antitrust regulator imposed a fine equivalent to $2.8 billion against Alibaba Group Holding Ltd. for abusing its dominant position over rivals and merchants on its e-commerce platforms, a record penalty in the country that comes amid a wave of scrutiny on the business empire of company founder Jack Ma.

China’s State Administration for Market Regulation said Saturday in Beijing that Alibaba punished certain merchants who sold goods both on Alibaba and on rival platforms, a practice that it dubbed “er xuan yi”—literally, “choose one out of two.”

As part of the penalty, regulators will require that Alibaba carry out a comprehensive revamp of its operations and submit a “self-examination compliance report” within the next three years, they said. The 18.2 billion yuan fine is equivalent to 4% of the company’s domestic annual sales, the regulator added. Under Chinese rules, antitrust fines are capped at 10% of a company’s annual sales.

Alibaba’s business practices limited competition, affected innovation, infringed on the rights of merchants and harmed the interests of consumers, the regulator said.

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To: Sr K who wrote (759)4/12/2021 6:15:59 AM
From: Glenn Petersen
   of 795
 
Alibaba shares rise 6% in U.S. premarket trading after $2.8 billion anti-monopoly fine

PUBLISHED SUN, APR 11 20219:52 PM EDT
UPDATED MON, APR 12 20214:32 AM EDT
Arjun Kharpal @ARJUNKHARPAL
CNBC.com

KEY POINTS

-- Alibaba was fined 18.23 billion yuan ($2.8 billion) by Chinese regulators as a result of an anti-monopoly investigation.

-- Alibaba shares rose 6% in premarket trading in the U.S. following a 6.5% rally in Hong Kong.

-- Alibaba CEO Daniel Zhang said he does not expect a material impact on the company from the change of this exclusivity arrangement.

GUANGZHOU, China — Alibaba shares rose 6% in premarket trading in the U.S. after the company was fined 18.23 billion yuan ($2.8 billion) by Chinese regulators as a result of an anti-monopoly investigation.

Alibaba’s Hong Kong-listed shares closed 6.5% higher on Monday.

“Despite the record fine amount, we think this should lift a major overhang on BABA and shift the market’s focus back to fundamentals,” Morgan Stanley wrote in a note on Sunday, a day after the fine was issued.

Chinese regulators opened an anti-monopoly probe into Alibaba in December. The main focus was around a practice that forces merchants to list their products on one of two e-commerce platforms, rather than choosing both.

China’s State Administration for Market Regulation (SAMR) said on a Saturday that this practice stifles competition in China’s online retail market and “infringes on the businesses of merchants on the platforms and the legitimate rights and interests of consumers.”

Alibaba CEO Daniel Zhang said he does not expect a material impact on the company from the change of this exclusivity arrangement.

Zhang also said Alibaba will introduce new measures to lower the entry barriers and costs for businesses and merchants on the platform. The company will also continue to expand to smaller Chinese cities and rural areas, the CEO added.

China’s technology companies have grown, largely unencumbered, into giants. But Beijing is becoming increasingly concerned by the power of these firms.

Regulatory scrutiny has focused on Alibaba founder Jack Ma’s empire after the billionaire made some comments in October that appeared critical of China’s financial regulator.

Not long after, regulators pulled the plug on what would have been a record-setting initial public offering of Ant Group, the financial technology giant Ma founded.

Joe Tsai, the executive vice chairman of Alibaba, said on Monday he is not aware of any more investigations regarding the anti-monopoly law.

“We are pleased that we are able to put this matter behind us,” Tsai said.

But Tsai said that Alibaba and its peers are subject to inquiries from regulators on mergers, acquisitions and strategic investments as part of a review process.

In addition to the fine, which amounts to about 4% of the company’s 2019 revenue, regulators said Alibaba will have to file self-examination and compliance reports to the SAMR for three years.

CNBC’s Christine Wang contributed to this report.

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From: Glenn Petersen4/12/2021 8:14:25 AM
   of 795
 
Jack Ma’s Ant Group to become financial holding company under a Beijing-enforced revamp

PUBLISHED MON, APR 12 20217:41 AM EDT
UPDATED MON, APR 12 20217:52 AM EDT
Reuters

KEY POINTS

-- Jack Ma’s Ant Group will restructure as a financial holding company, China’s central bank said on Monday.

--The fintech giant’s $37 billion IPO was derailed by risk-wary regulators days before it was due to list in November.

-- The overhaul comes two days after e-commerce giant Alibaba, of which Ant is an affiliate, was hit with a $2.75 billion antitrust penalty as China tightens controls on the “platform economy.”

China’s Ant Group, the fintech giant whose $37 billion initial public offering was derailed by risk-wary regulators days before it was due to list in November, will restructure as a financial holding company, the country’s central bank said on Monday.

The overhaul comes two days after e-commerce giant Alibaba, of which Ant is an affiliate, was hit with a $2.75 billion antitrust penalty as China tightens controls on the “platform economy.”

Under terms of the settlement, Ant will restructure as a financial holding company, a move that, along with other restrictions announced on Monday, is expected to curb its profitability and valuation.

“Ant Group attaches great importance to the seriousness of the rectification,” the company said in a statement, adding it planned to set up a personal credit reporting business and to fold its two flagship lending businesses into its consumer finance company.

The People’s Bank of China said that under a “comprehensive and feasible restructuring plan,” Ant would cut the “improper” linkage between payments service AliPay, virtual credit card business Jiebei and consumer loan unit Huabei.

The central bank also asked Ant to break its “monopoly on information and strictly comply with the requirements of credit information business regulation.”

The company, part of the sprawling business empire founded by billionaire Jack Ma, agreed to improve corporate governance and “rectify illegal financial activities in credit, insurance and wealth management,” the central bank said.

The central bank said it had also asked Ant to control its leverage and product risks, and control the liquidity risk of its flagship fund products and to “actively lower” the size of its massive Yu’eBao money market fund.

The measures “set an example” for financial regulation of the platform economy,” the state-backed Economic Daily newspaper said in a Monday commentary.

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To: Glenn Petersen who wrote (761)4/12/2021 9:15:18 AM
From: The Ox
   of 795
 
These items are major positives for BABA. The main uncertainty has been removed and that should help them rebound over time, IMO.

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To: The Ox who wrote (762)4/12/2021 9:23:09 AM
From: Glenn Petersen
1 Recommendation   of 795
 
Agreed. The dollar amount of the settlement was inconsequential. The fact that they settled was the important news. There will be no appeal, of course. Hard to imagine Alphabet, Facebook and Amazon going down without a fight.

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