Alibaba is reportedly pushing users off its platform if they sign up to sell on its rival online marketplace Pinduoduo.
Merchants are being told by the Chinese ecommerce giant to “erxuanyi” (pick one of two), adding that unless sellers shut down their Pinduoduo sites shoppers would no longer be directed to products on through its Tmall platform, according to the Financial Times.
Pinduoduo is now Alibaba’s largest rival in China boasting 536 million customers a year, around three quarters of Alibaba’s 693 million and significantly more than the other market contender JD.com, which has 334 million.
Galanz Group, the world’s largest manufacturer of microwaves, said that Alibaba began to divert traffic away from its Tmall store and even remove its top selling product altogether after its president Liang Zhaoxian visited the Pinduoduo headquarters and signed a co-operation agreement.
The company began speaking out against Alibaba following the activity, but saw its sales via Tmall halve in June compared to a year earlier, while traffic dropped 37 per cent, falling to 69 per cent by November.
In response Galanz filed a complaint to Guangzhou court stating that Alibaba was violating antitrust laws and abusing its dominant market position.
Pinduoduo told analysts in November that more than 10,000 sellers on its site had complained of a rival “forcing merchants to take sides”.
Alibaba denies these claims, stating: “It’s understandable that smaller platforms with fewer and limited resources and services, who can’t match what we offer, feel overwhelmed. Some have chosen to ‘cry foul’ as a business tactic, appealing to regulators and the courts, trying to slow the market down. That ultimately won’t work.”
“If a brand’s product offering is relevant, and their price is competitive on our marketplace, it will organically show up. It’s not about other platforms.”
According to tech think-tank Haitun’s chief executive Li Chengdong “Forced exclusivity is an open secret in China’s ecommerce industry”, and Alibaba has employed similar tactics in the past to dissuade fashion sellers from using JD.com.