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China Cracks Down on Alibaba

Allegedly sold fake goods.

One of China’s biggest private companies, Alibaba, is seeing some harsh criticism by Chinese regulators for permitting sales of fake goods and hurting consumers. The information, which stems from a July 2014 meeting, was held from the public until after the e-commerce giant’s U.S. stock market debut to avoid any negative disruption. The stern State Administration of Industry and Commerce report revealed that Alibaba allowed unlicensed merchants to use two of its platforms and failed to protect consumers’ rights. “Illegal business exists on Alibaba Group’s trading platforms, and for a long time the company has failed to pay adequate attention and failed to take measures to stop it,” the report said. “This not only is the biggest crisis of integrity faced by the company since its founding, but also has hurt other Internet companies that try to operate legally.” Alibaba responded with a surprising public complaint instead of promising reform, which is typically the norm.