The move follows BABA’s massive efforts to stop sellers from peddling counterfeit goods on its Taobao marketplace, which apparently haven’t been effective enough. From Recode:
On Wednesday, the Office of the United States Trade Representative dumped Alibaba back on its Notorious Markets List, which “highlights prominent online and physical marketplaces that reportedly engage in and facilitate substantial copyright piracy and trademark counterfeiting.” This comes four years after the USTR had removed the Chinese e-commerce company from the list after it made some progress in combating fakes.
According to the U.S. government, “Commercial-scale trademark counterfeiting and copyright piracy cause significant financial losses for right holders and legitimate businesses, undermine critical U.S. comparative advantages in innovation and creativity to the detriment of American workers, and can pose significant risks to consumer health and safety.”
Referencing Alibaba specifically, the report notes “Right holders in the United States and internationally continue to report serious challenges to reducing high levels of counterfeit and pirated goods on Taobao. Longstanding obstacles to understanding and utilizing basic IP enforcement procedures continue unabated.”
Taobao, which is owned by Alibaba, is a Chinese shopping platform similar to eBay or Amazon, where third party sellers can list goods for sale.
Alibaba has been trying to court major U.S. brands to get them to sell their wares on its shopping platforms, and this move will no doubt set those efforts back considerably. The company said via statement that it was “very disappointed” by the decision, and took a shot at president-elect Donald Trump, wondering if it was “influenced by the current political climate.”
All politics aside, if BABA wants to establish strong relationships with Western brands, it has to be even more aggressive in its efforts to combat the selling fake items.
Alibaba shares fell $1.38 (-1.55%) to $87.87 in premarket trading Thursday. Year-to-date, BABA has gained 9.82%, versus a 10.74% return from the benchmark S&P 500 index during the same period.