It hasn’t been a great couple of weeks for Alibaba in the U.S.. First affiliate Ant Financial’s proposed acquisition of MoneyGram collapsed due to objections from the U.S. government, now its Taobao service has the dubious honor of again featuring on the USTR (United States Trade Representative) naughty list.
Taobao, Alibaba’s hugely popular marketplace, is among 25 e-commerce sites to feature in the latest USTR ‘Notorious Markets’ list. The annual list roots out physical and digital marketplaces that are adjudged to be “engaging in and facilitating substantial copyright piracy and trademark counterfeiting.”
The key concern of the report on Taobao is around how Alibaba works with IP holders to remove counterfeit listings and prevent sales of unlicensed goods.
“A high volume of infringing products reportedly continue to be offered for sale and sold on Taobao.com and stakeholders continue to report challenges and burdens associated with IP enforcement on the platform,” the report said of Taobao, which is a key service that helps Alibaba reach 488 million Chinese consumers each year.
The USTR acknowledged that Alibaba has taken steps to improve the situation, but it noted that “important unresolved concerns remained.” In particular, the report said Alibaba hasn’t clearly articulated the scale of Taobao’s counterfeiting issue, instead choosing to present progress it has made. It was also criticized for prioritizing major brands over the concerns of SMEs.
Alibaba responded with with a “point by point rebuttal” of the section of the report focused on Taobao. Alibaba Group President Michael Evans said in a blog post that the company “went above and beyond each specific concern raised by the USTR last year.”
“It’s clear that no matter how much action we take and progress we make, the USTR is not actually interested in seeing tangible results. Therefore, our inclusion on its list is not an accurate representation of Alibaba’s results in protecting brands and IP, and we have no other choice but to conclude that this is a deeply flawed, biased and politicized process,” Evans said.
In a separate statement, Alibaba said politics were behind Taobao’s inclusion on the list:
“As a result of the rise of trade protectionism, Alibaba has been turned into a scapegoat by the USTR to win points in a highly-politicized environment and their actions should be recognized for what they are. The USTR’s actions made it clear that the Notorious Markets List, which only targets non-US marketplaces, is not about intellectual property protection, but just another instrument to achieve the US Government’s geopolitical objective,” a spokesperson said by email.
Certainly a difficult fortnight for Alibaba-U.S. government relations. Alibaba founder Jack Ma met President Trump back in January 2017 when he pledged to use Alibaba’s services to create work for one million people in the U.S.. That promise seemed difficult to fulfill at the time, and a year later it seems even less likely to become a reality.