Alibaba’s planned restructuring might mollify the Chinese government's concerns about its size and influence. But the move does not seem likely to alleviate antitrust concerns in any meaningful way, and there is no strong business justification for the company's chosen approach.
HONG KONG – Markets are welcoming Chinese tech giant Alibaba’s plan to split into six independent entities. The reason might seem obvious. Because smaller autonomous units appear likely to be nimbler and more adaptable, one might expect the restructuring to help to revitalize the massive company and boost productivity. One might also assume that dividing the company will alleviate the monopoly concerns that have made Alibaba a primary target of regulators in recent years. But, as compelling as this logic seems, it is deeply flawed.
HONG KONG – Markets are welcoming Chinese tech giant Alibaba’s plan to split into six independent entities. The reason might seem obvious. Because smaller autonomous units appear likely to be nimbler and more adaptable, one might expect the restructuring to help to revitalize the massive company and boost productivity. One might also assume that dividing the company will alleviate the monopoly concerns that have made Alibaba a primary target of regulators in recent years. But, as compelling as this logic seems, it is deeply flawed.