Is Alibaba getting too big for its own good?

January 29, 2015 08:54 AM

It's not every day that an executive for a Chinese company, let alone one of China's best- known companies, takes a public shot at the Chinese government.

That's just what Joe Tsai did. The Alibaba co-founder and right-hand man to Chairman Jack Ma opened an earnings call Thursday with a full-on barrage at the regulator that released a scathing report accusing the e-commerce giant of failing to crack down on counterfeit good and shady merchants on its online malls.

Tsai said the company was "deeply troubled" by the actions of the State Administration for Industry & Commerce, a consumer protection watchdog. Taobao has filed a complaint against the agency official who presided over a meeting to discuss the claims in July.

"We believe the flawed approach taken in the report, and the tactic of releasing a so-called 'white paper' specifically targeting us, was so unfair that we felt compelled to take the extraordinary step of preparing a formal complaint to the SAIC," Tsai said. Alibaba has zero tolerance for counterfeit goods on its marketplace, he said.

On Wednesday, Alibaba's shares fell the most in two months, a sign of investors' nervousness about the prospect of a fight with China's ruling Communist Party.

Alibaba has an "interesting" relationship with the Chinese government, Ma told Charlie Rose in Davos. He traveled to Switzerland as part of Premier Li Keqiang's delegation. And the central bank recently granted Alibaba a license to operate credit services, allowing them to directly compete against the state-run banks.

The government's report was held up so as not to affect the company's $25 billion IPO in September, the government said. Tsai pushed back against that, too, saying the company never asked for a delay.

That "so-called white paper" was taken down by the government today. So, it seems the Chinese government has the next move.

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