While Chinese regulators prepare anti-monopoly measures against Internet giant Alibaba, the US House Judiciary Committee made nearly-identical accusations against Amazon.com, the dominant US online retailer and the world’s e-commerce pioneer. Both companies used their dominant market share to force merchants into exclusive deals that shut out competitors, regulators allege.
It’s not often that Chinese and American regulators attack the same problem in the same way, but the economics of Internet retailing raises the same problem in both countries. There’s a fuzzy line between what economists call “natural monopolies” due to the network effect, which gives a major player like Amazon, Facebook or Google huge advantages, and the predatory exercise of monopoly powers to crush competitors. Tech industry regulators around the world find themselves in the same boat, despite radical differences in regulatory systems.
Some Western commentators claim that a power struggle between China’s Communist leadership and entrepreneur Jack Ma, Alibaba’s founder, motivated the anti-monopoly crackdown on Alibaba and other Chinese tech giants. Chinese authorities postponed a planned $36 billion Initial Public Offering for Ma’s Ant Financial in early October after the billionaire clashed publicly with Chinese Vice President Wang Qishan.