Alibaba stock plunges after China launches anti-monopoly probe into online retailer

China’s antitrust regulator has kicked off an investigation into alleged monopolistic practices of internet giant Alibaba. One of Jack Ma’s other crown jewels, Ant Group, has been summoned for a regulatory meeting.

The probe was announced on Thursday by the country’s top market watchdog, the State Administration for Market Regulation. In a brief statement on its website, the regulator said it was investigating Alibaba over its “choosing one from two” policy, which reportedly puts pressure on its sellers not to offer their goods on rival services.

On the same day, China’s central bank and the agencies overseeing securities, banking and insurance, announced that they would meet with the executives of fintech company Ant Group, the long-anticipated IPO of which had been abruptly called off earlier this year.

According to Xinhua, the agencies want to “supervise and guide Ant Group” to implement financial and other legal requirements as well as “regulate its operation and development of financial services.” 

Both companies confirmed that they are aware of the regulatory actions. Ant Group, backed by Alibaba founder Jack Ma, said it would “seriously study and strictly comply with all regulatory requirements and commit fully to fulfilling all related work.” 

Alibaba vowed to actively cooperate with the regulators on the investigation, adding that its businesses operations remain normal. The news of the probe plunged the online giant’s shares, which closed eight percent lower in Hong Kong. New York-listed shares of Alibaba were down more than three percent in after-hours trading.

The regulatory move is seen as part of a broader action by the Chinese government to tighten control on the rapidly developing fintech industry. The same trend is seen in other parts of the world, including the US and Europe.

Last month, China's bureau for regulating monopolies released new draft rules that define what constitutes anti-competitive behavior, addressing such issues as data collection and use as well as consumer protection among other areas.

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