China’s antitrust regulator said on Thursday it had launched an investigation into the e-commerce giant, Alibaba Group (HKG: 9988). The tech company’s Ant Group affiliate, as per the State Administration for Market Regulation (SAMR), will be summoned for a meeting in the upcoming weeks.
The Hong Kong-listed shares of Alibaba opened roughly 3.5% down on Thursday and slid another 5% in the next hour. At £21.67 per share, the tech giant is now a little under 10% up year to date in the stock market after recovering from a low of £16.14 per share in late March, when the COVID-19 restrictions were globally at their peak.
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In a statement last week, Alibaba said Uygur-tracking facial recognition violated company values as it removed the software after heavy criticism from the international forum.
China suspended Ant Group’s IPO in November
The probe comes only a month after China suspended Ant Group’s initial public offering only two days before its shares were scheduled to debut in Hong Kong and Shanghai. The Alibaba affiliate company was expected to raise £27.24 billion in its IPO that was likely to be the world’s largest in history.
In an editorial on Thursday, China’s largest newspaper group, People’s Daily said:
“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.”
The People’s Bank of China also highlighted in a separate statement on Thursday that it intends to meet with Ant Group officials in the coming days. The bank said:
“The meeting would guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers.”
Alibaba says it will cooperate with the investigation
Responding to the news on Thursday, Alibaba pledged cooperation with the investigation. Ant Group also said on Thursday that it was a priority for the company to comply with the laid out regulatory guidelines.
In a report published in the first week of November, Alibaba said its revenue in the fiscal second quarter posted a 30% year over year growth amidst the ongoing COVID-19 crisis that fuelled e-commerce in recent months.
Alibaba debuted in Hong Kong last year in November at a per-share price of £18.84. At the time of writing, the e-commerce giant is valued at £470 billion and has a price to earnings ratio of 29.55.