In the battle for market dominance, Chinese e-commerce giants have burnt through mountains of cash to subsidise their customers and nurture their spending habits. But for their merchants? They demand total loyalty.

That’s at the core of allegations by the State Administration for Market Regulation, which on Thursday said it was launching an investigation into monopolistic practices of Alibaba – just the latest regulatory hurdle facing the e-commerce giant founded by billionaire Jack Ma.

One of the practices being probed is known colloquially as “choosing one from two” – in which Alibaba demanded merchants sign an exclusive pact that effectively stopped them from supplying products to rival platforms, such as Tencent-backed JD.com.

At a promotional event in 2017, for example, Alibaba forced more than 200 merchants to quit a campaign organized by JD.com, asking them to close their virtual stores on the rival’s platform. The same year, JD.com sued Alibaba for abusing its market-leading positions. There was a closed-door hearing of the case last month.

Forcing merchants to sign up to exclusive contracts also extends to online food deliveries: Alibaba-backed ele.me two years ago stopped restaurants from partnering with other platforms, including Tencent-backed Meituan. Ele.me was fined 50,000 yuan (US$7,657) by a district-level market regulator in a city in northern China last that year.

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