Alibaba (BABA) has become the latest Chinese internet stock to fall foul of Beijing’s internet crackdown as regulators ordered it to fix its Taobao service, reports Bloomberg.
The news that Alibaba has been caught in Beijing’s attempts to clean up the internet comes ahead of the e-commerce giant’s latest quarterly earnings due out on Thursday morning U.S. time. Barron’s emerging markets blogger Dimitra DeFotis has been closing following what analysts expect from the results.
Bloomberg has more details on why Taobao, Alibaba’s online marketplace, has come into Beijing’s crosshairs:
The Cyberspace Administration of China on Thursday singled out five services, including Alibaba’s Taobao internet bazaar, for criticism and ordered them to rectify their problems immediately. Responding to reports from users, it discovered “controlled substances” as well as illegal virtual private network tools — used to access foreign websites — for sale on Taobao, the regulator’s Zhejiang branch said in a post on its WeChat account.
Bloomberg says it’s not clear what Alibaba may have done wrong:
It’s unclear what sort of violations the regulator was referring to: illicit substances could run the gamut from drugs and pornography to unauthorized DVDs or games. In response to queries about the regulator’s notice, Alibaba said it will continue to enforce its policy of barring illegal products.
The latest move on China’s most successful company comes after the government launched an investigation into the news services offered by Tencent (700.HK), Baidu (BIDU) and Weibo (WB). For more details please read Tencent, Baidu and Weibo Targeted in China Crackdown.
Chinese internet stocks have enjoyed a massive rally this year. Alibaba is up 81%, Weibo has gained 117% and Baidu has advanced 38%. Tencent is up 73%.
Source:-barrons.
