The Chinese government has expanded its antitrust crackdown beyond Jack Ma’s technological empire and has begun investigating allegations of monopoly practices by food delivery giant Meituan.
The state government for market regulation is investigating allegations of abuse, including a compulsory monopoly arrangement known as “choose one of the two,” and ended up with a $ 2.8 billion fine. Alibaba Group Holding Ltd. I use the same word in my research. China’s third-largest internet company loses early on Tuesday after Meituan estimates that Meituan will have to fork only 4.6 billion yuan ($ 709 million) under Alibaba’s punishment, Nomura analysts Was recovered and increased by 3.1%.
Meituan’s investigation cracks down on Beijing by Ma’s Alibaba Group Holding Ltd. And has expanded beyond Ant Group Co., threatening to undermine the ambitions of its founder, Wang Xing, one of China’s most active entrepreneurs. The government has added to the growing impact of giants such as Alibaba, Tencent Holdings Ltd. and Meituan on every aspect of China’s life, and the vast amount of data it has accumulated by providing services such as online shopping, chat and riding. I am more and more concerned. Cheers.
Regulators impose record fines on Alibaba, direct affiliate Ant to review business, and rectify anti-competitive business practices within 34 largest tech companies, including Meituan The antitrust campaign has been accelerating in recent weeks because of the order. After meeting with SAMR, the Beijing-based company maintained market order, did not force merchants to “choose one of the two,” but chose either Meituan or its rivals. He said he would not enforce it and pledged to comply with antitrust laws. In an irrational way.
Meituan said in a statement Monday that it would actively cooperate with probes and step up efforts to comply with regulations.
Nomura analysts Zialon Sea and Thomas Shen said that choosing one of two practices “helped to differentiate restaurant supply from competitors, which made it a big deal early in the food delivery competition. It played a role, “he wrote in his research notebook. “Meituan’s strong market position and customer loyalty have allowed Meituan to go beyond this.”
It remains uncertain whether regulators will target other aspects of Chinese companies.
Founded by 42-year-old King Billionaire, the company has long been criticized by rivals and merchants for excessive suspicions such as compulsory monopoly contracts. The company, which is competing with Alibaba’s Ele.me for food delivery, was found guilty of unfair competition in at least two proceedings this year and was ordered to pay compensation, local media reported. The company also rejected allegations that it charged restaurants a nasty fee when COVID-19 occurred last year.
Along with Ele.me, Meituan faced an online backlash after several delivery riders were killed or injured when trying to meet tight deadlines. It was one of the few operators to be fined by antitrust watchers in March for improperly subsidizing the community to expand into the bright red areas of e-commerce.
“This latest news shows that the enforcement of this antitrust law is far more stringent and stricter than we originally thought,” Nomura analysts write.
Prior to the investigation, Meituan said it would raise $ 10 billion through a record sale of shares and a convertible bond offered by a Hong Kong-listed company. The company said it would use the money not only to drive investment in new technologies such as autonomous distribution, but also for general corporate purposes.
Under antitrust laws, Meituan can face a penalty of as much as 10% of its revenue if it turns out to be in breach of regulation. In 2020, sales were about 114.8 billion yuan ($ 17.7 billion). In contrast, rival Alibaba was fined $ 2.8 billion, or about 4% of domestic revenue in 2019.
A leading coding expert whose systematic obsession with data and algorithms proved Ele.me’s humility, King publicly telegraphed his ambitions. In a 2017 interview with local media, Meituan will join Alibaba and Tencent as the third member of China’s triumvirate in five to ten years to bring value to food, travel and other services. Said that it can be done.
Wang explained in a long online post last week how to pour the money raised for research on autonomous drones and distribution systems. Meituan, Alibaba, JD.com Inc., Pinduoduo Inc. for food and agricultural supply. It was expected that a fierce battle between subsidies and sweeteners would be fought.
Meituan’s share almost tripled in 2020, making it one of the highest performing technology stocks in China. China’s antitrust campaign has accelerated, and the company has reported increased losses due to investments in new businesses such as online grocery stores, a decrease of about 31% from February records. The dollar bond spread widened on Monday after the Watchdog announcement.
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