“Alibaba, like all other big Chinese tech, is in [an] existential crisis,” said Alex Capri, a research fellow at Hinrich Foundation and a visiting senior fellow at National University of Singapore.
An escalating crackdown at home
Capri pointed to the growing clampdown within China as a particular concern for Alibaba and its peers.
“The weeks and months ahead will see this trend accelerate,” Capri said. “Access to and control of data and digital platforms is key. Thus, if this means breaking up Alibaba or making it a quasi-state owned company, this could happen.”
“Washington’s focus on these matters will continue under a [Joe] Biden administration,” Capri said, referring to the president elect. “Thus, even if there is a return to measured language and diplomacy, we could see more strategic decoupling from Chinese digital companies.”
“China won’t want to seem [like it would be willing] to destroy one of its biggest national champions in plain sight of a new administration in DC,” said Rana Mitter, professor of history and politics of modern China at Oxford University. He added that he suspects any kind of change to Alibaba’s business would therefore be on a “medium scale,” rather than “full breakup.”
“I think Beijing will want to get a sense of what lies behind the Biden team’s rhetoric before assessing the effect of any US moves,” Mitter added.
However Beijing allows Washington’s behavior to influence its decisions, co-founder Ma’s prolonged silence compounds Alibaba’s troubles at home — and “can only undermine market confidence in the company,” said Brock Silvers, chief investment officer for Kaiyuan Capital.
And while Alibaba seems more likely to remain intact, the company isn’t immune from regulatory threat.
“Whether 2021 is more kind to Alibaba may depend on the ultimate nature and length of Jack Ma’s sudden silence,” Silvers said.