Alibaba Is Now An Antitrust Target In China. How Real Is The Threat?

* News broke that China is now formally investigating Alibaba for antitrust violations.

* Alibaba has a vast network of investments and either directly or indirectly invests in almost all areas of technology in China. Targets for the probe look to have ample avenues.

* Both China and Alibaba look to walk the tightrope here to preserve Alibaba's global reach and prestige while limiting its domestic power.

* I continue to hold shares due to the valuation however I am not adding until more clarity is achieved.

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The news of China's investigation into Alibaba (BABA) was somehow both shocking and yet also completely expected.

The official line from China via The People’s Daily is that this is a natural byproduct of development and that "Wild growth in markets, needs to be curbed by law" adding that "Anti-monopoly has become an urgent issue that concerns all matters."

However, this is clearly a bit personal between Chinese President Xi and Jack Ma of Alibaba. The current probe against Alibaba and a few other key tech companies looks to have begun in November, coincidentally, right after Ma issued what some consider a virtual tongue lashing of Chinese regulators and therefore also insulting President Xi during a public address.

Chinese regulators then almost immediately suspended Ant’s highly anticipated IPO while the anti-monopoly watchdog threw wrench after wrench at the company's shares with a slow drip of news hinting at major changes to come, leading to the report tonight.

The key question here is, to what extent is China willing to throw Alibaba to the wolves?

In my opinion, this is a tactical question more than a regulatory question as Alibaba frankly is the posterchild for Chinese tech prestige, rising like a phoenix, primed to take on the large US companies

There’s this mistaken perception that China is a mass of obedient drones in thrall to whomever is chief at any given time. This is a clear case of who you’re gonna believe - the narrative or your lyin’ eyes. 2200 years ago, over a century before Spartacus, a jumped-up peasant https://en.wikipedia.org/wiki/Emperor_Gaozu_of_Han joined an uprising against the First Emperor https://en.wikipedia.org/wiki/Qin_Shi_Huang, whose idea of collectivism was that everyone should join together to help him unify the known world under his rule.

Were the rebels one big, happy family? No. They slaughtered each other even while fighting the ancien regime and continued this endeavor after the regime was toppled. https://en.wikipedia.org/wiki/Chu%E2%80%93Han_Contention https://en.wikipedia.org/wiki/Han_Xin#Service_during_the_Western_Han_dynasty https://en.wikipedia.org/wiki/Peng_Yue#Death

Was the First Emperor’s ancien regime one big, happy family? No. There were multiple assassination attempts against him. https://en.wikipedia.org/wiki/Qin_Shi_Huang#Third_attempted_assassination He died of poisoning, allegedly while trying out a potion that promised him eternal life. Or was he deliberately poisoned? https://en.wikipedia.org/wiki/Qin_Shi_Huang#Elixir_of_life And after the First Emperor’s death, his closest advisor, the head eunuch, killed *two* of his sons - the putative heir apparent *and* a (puppet) child emperor that this eunuch appointed as a successor to the imperial line. https://en.wikipedia.org/wiki/Zhao_Gao#Coup_following_Qin_Shi_Huang‘s_death Did the regime’s remnants “unify” under this eunuch? No - they fought a known-down-drag-out war against each other even while fighting the rebels who were out for their heads.

China has always been a seething mass of individual ambition. Elite struggles for power have been part and parcel of historical chronicles outside of China. What’s unique about China, IMHO, is that the ambition goes all the way down to the lowliest peasant. As pointed out earlier, 2200 years ago, a jumped-up peasant joined a mass revolt, vaulted to the top by (1) playing a secondary role in defeating the ancien regime and (2) wiping out the players who played the primary role, then established a regime that lasted 400 years (with an interruption caused by an ambitious courtier who revolted and set himself up as emperor), thanks to his precaution of either forcibly retiring or killing the military commanders (each of whom had their own agendas, much like term-limited Roman consuls) who had brought him to power.

At the slightest opportunity, charismatic men possessed of organizational skills have repeatedly rallied large numbers to their banners and either established new regimes, or come within striking distance, doing great damage, and paving the way for the next challenger to finish the job. That is why Chinese rulers are never at ease - the principal lesson of Chinese history is that the smallest spark could set off a nationwide conflagration.

It is raw individual ambition, not collectivism, that sets the Chinese experience apart, no matter how much regime propaganda over thousands of years keeps trying to convince the population that they are mere cogs in a machine. Overwhelming regime power convinces the hoi polloi that they should observe the forms of obedience - by not overtly criticizing the regime or opposing it. But in the background, they are bribing officials for relief against tyrannical impositions, evading tax payments and the draft and generally skirting the law to the extent prudent. And when their moment comes - they join general risings and attempt to elevate themselves to the top ahead of everyone else around them.

The upshot of the previous post is that Chinese rulers are always on alert against challenges to their authority. And when I say challenges, I don’t mean in the verbal sense. I mean bottom-up revolts or coup attempts that end up in their deaths and the deaths of their entire clans. One of Mao’s wives ended up literally losing her head.

http://www.executedtoday.com/2012/11/14/1930-yang-kaihui-mao-zedong-wife/

Jack Ma is now rich enough ($57b) to finance Xi’s challengers with a small portion of his wealth. Xi must therefore cut him down to size, both to neuter the threat and as an exemplary measure against those who might be thinking of funding Xi’s rivals. One of Jack Ma’s publications, the English language South China Morning Post, whose audience is primarily American and British expats, cannot be accessed in China. That might provide an indication of some of the passive aggressive things Ma has been doing against Xi, in a world in which anything less than groveling submission is nothing short of lese majeste against Xi, the reigning King of China https://www.cnn.com/2019/04/02/politics/trump-xi-king-of-china-intl/index.html in all but name.

A BIDEN WIN WILL BE AN AWARD TO CHINA FOR USING COVID 19

Every time an American looked at an item for where it was made in it came from China. Now China’s reliance making everything was being threatened by a change in leadership in America which was a major consumer of those products. When Americans hailed their leaders decision to make many of them in their country US. Their politburo worried.

Worse yet opponents to the Chinese regime in power had its citizens protesting its policies , as in Hong Kong, since that change in American leadership wave the American flag and present Trump’s name when doing so. All of which presented those in power the need to destroy that leader Donald Trump.

Would a runaway plague created by a nation which could threaten populations of an enemy cause them to react by demanding extreme restriction of movement by its population to prevent its spread ? Thus wind up fragmenting its economy and create defeat for that leader’s upcoming election.

Americans better WISE UP/
Key swamp demons were making fortunes when they allowed US companies in a number of industries including pharma, computer; and electrical as well metal fabrication components even bicycles relocate their factories in China . To the point where China was our sole supplier. The money the CCP has now comes from US .If we play our Chinese checkers right we can really turn things around for the better not only here but in China as well.Check out this recent posting in Free Republic.com which the MSM and social venues will spike; http://www.freerepublic.com/focus/f-chat/3890312/posts which will end with the Biden presidency

[Isn’t that true of everybody? The Roman empire was just as full of those sordid events. Yoy either are ruthless against your enemies or soon they will have your head.]

In Rome, they only really had to worry about the elites. Spartacus was the closest anyone low-born came to toppling the ancien regime, and it wasn’t remotely close. In China, they had to worry about the lowliest peasant. 2200 years ago, China had 3 peasant emperors in 400 years, the latter two of which were descended from cadet branches https://en.wikipedia.org/wiki/Cadet_branch that had devolved all the way back to the soil.

https://en.wikipedia.org/wiki/Emperor_Gaozu_of_Han
https://en.wikipedia.org/wiki/Emperor_Guangwu_of_Han
https://en.wikipedia.org/wiki/Liu_Bei

The impressive thing about these men is how resourceful they were in knitting together the coalitions necessary to both stay alive and increase their power base, killing both enemies and former allies without being killed along the way. Gaius Julius Caesar and Gaius Octavius Thurinus both did something similar, but they were high-born, well-educated, and had significant resources as well as family connections to help them with the task of becoming consul.

Their Chinese counterparts were literal peasants. The first man on the above list was an illiterate. The last personally made straw sandals for a living. They were almost the literal dregs of the empire they eventually made their own.

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