Alibaba Group Holding Limited (BABA) shares have been trading lower for the second-straight day after the Chinese State Administration for Market Regulation (SAMR) released a draft related to anti-monopoly regulations, primarily targeting internet and technology companies. The latest rules will result in more scrutiny on e-commerce marketplaces, especially those operated by Alibaba. Chinese regulators have expressed serious concerns over the increasing power of digital platforms and their practices. SAMR is trying to prevent bigger platforms from adopting practices that hamper fair competition.
The regulations forbid range of monopolistic practices such as the abuse of dominant market positions, under which an e-commerce platform prevents a brand from selling on any other platform. Now, the big e-commerce sites will no longer be able to restrict smaller merchants from selling their products on multiple platforms.
Alibaba in the past has received criticism by several competitors for adopting such practices. SAMR last year arranged a meeting with some leading online marketplaces and asked them to stop making exclusive corporation deals with vendors. Analysts believe the latest guidelines will put a check on the power of big tech platforms, as well it will ensure fair competition in the market.
The new regulations also come just one week after Chinese regulators stopped the public listing of Ant Group, which is also an affiliate of Alibaba. The regulators also warned Alibaba that it will now face more strict scrutiny from the government. On the other hand, some industry experts think the latest rules will not have any significant material impact on Alibaba. In fact, the Chinese e-commerce giant may benefit from the latest regulations, which also restrict new vendors from gaining market share by aggressive pricing.
Alibaba (NYSE: BABA) shares have slipped more than 6 percent over the past 5 days. The company’s market value has dropped to $772.73 billion.
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