In a significant development, China's top market watchdog on Thursday (24 December) started investigation into alleged anti-competition practices by ecommerce giant Alibaba, as Beijing tightened control of an expanding Internet.
In a brief note, the State Administration for Market Regulation said that it is investigating Alibaba over its "choosing one from two" policy.
As part of this policy, merchants are forced to sell exclusively on Alibaba e-commerce platforms and skip rivals like JD.com.
"The State Administration of Market Supervision, based on reports, filed investigations into Alibaba Group Holdings Co., Ltd. for suspected monopolistic conduct such as 'choose one out of two,'" the statement read.
Alibaba Group said in a statement that they have received notification from the State Administration for Market Regulation.
"Alibaba will actively cooperate with the regulators on the investigation," the company said, adding that its "business operations remain normal."
Xinhua news agency said on Thursday that The People's Bank of China, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, and State Administration of Foreign Exchange will "interview Ant Group in the near future".
Ant Group formerly known as Ant Financial and Alipay, is an affiliate company of the Alibaba Group.
The move is "to supervise and guide Ant Group to implement financial supervision and fair competition in accordance with the principles of marketisation and rule of law, and to protect the legitimate rights and interests of consumers, and regulate the operation and development of financial services".
Earlier last month, Ant Group’s $37 billion initial public offering (IPO) was withdrawn by regulators just 48 hours before shares were due to commence trading in Shanghai and Hong Kong, in the largest financial fundraising in global finance.
Financial regulators were reportedly concerned about lending practices by Ant Group, and wanted the fintech company to raise its capital allocation to support its loans to small and medium-sized enterprises.
However, the Wall Street Journal reported citing Chinese officials that Chinese President Xi Jinping personally scuttled Ant Group's $37-billion IPO after Jack Ma, the founder of Ant Group, launched a public attack on the country's financial watchdogs, regulatory landscape and state-owned banks.
According to the WSJ report, President Xi ordered Chinese regulators to investigate and effectively shut down Ant's stock market flotation.
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