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WEDNESDAY, JULY 23, 2025
China’s Alibaba slap offers clues to hit Amazon

Analysis

Reuters
13 April, 2021, 02:50 pm
Last modified: 13 April, 2021, 03:02 pm

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China’s Alibaba slap offers clues to hit Amazon

Third-party merchants have complained that Amazon unfairly competes against them when the Seattle-based tech giant sells its own products using information gleaned from its platform

Reuters
13 April, 2021, 02:50 pm
Last modified: 13 April, 2021, 03:02 pm
The logo of Amazon is seen on the door of an Amazon Books retail store in New York City, US, February 14, 2019. REUTERS/Brendan McDermid/File Photo To match Special Report AMAZON-INDIA/OPERATION
The logo of Amazon is seen on the door of an Amazon Books retail store in New York City, US, February 14, 2019. REUTERS/Brendan McDermid/File Photo To match Special Report AMAZON-INDIA/OPERATION

Alibaba's, $2.8 billion fine from the Chinese antitrust watchdog ought to worry US rival Amazon.com. Beijing's case against Jack Ma's e-commerce giant shows it's possible to define the market and single out data usage in ways that American regulators haven't yet managed to do, but could.

Big US technology firms have eluded regulators for several reasons. One is that in trying to pinpoint market abuse, watchdogs first have to agree what that market is. Even that isn't simple. Last year, Bezos told Congress that his company competes in the overall retail market, where it has less than 4% market share in the United States. But in e-commerce, it has 40% of sales, compared to No. 2 Walmart with 7%, according to eMarketer.

Jack Ma’s fortune jumps $2b after record Alibaba penalty

China's State Administration for Market Regulation set out its own agenda on Saturday. Alibaba's peer group, it says, is online retail platforms, not business-to-consumer e-commerce as the company had argued. But the watchdog went out of its way to say that offline stores are different. It noted that physical stores are limited by their geographic location, often have higher operating costs and have less efficient means to match merchants with consumers.

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Data also played a key role in China's thinking – as it would in a sober US assessment of Amazon. The SAMR said online platforms can use massive amounts of information gleaned from users to target customers and arrange personalized search results. It also pointed out that Alibaba is the largest public cloud-service provider in China, which helps its online retail business.

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Amazon has also been accused of using data to its advantage. Third-party merchants have complained that Amazon unfairly competes against them when the Seattle-based tech giant sells its own products using information gleaned from its platform. It's also the largest US cloud provider. And China's arguments that network effects help Alibaba out could also be argued over its American rival.

Fortunately for Bezos, there's one area where Chinese and US watchdogs aren't on the same page. The US regime tends to focus narrowly on prices, and American courts have traditionally upheld consumer welfare as the goal of antitrust actions. In contrast, the SAMR noted the more fuzzy threat to social welfare. Ma may have also been a convenient target after his criticisms of Beijing. A government like China's can afford to be big-picture and creative in its approach. That's harder to do in the United States – which might be Amazon's saving grace.

Top News / World+Biz / Global Economy

Amazon / Alibaba / Alibaba Group / China / Amazon Inc

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