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Update | Alibaba faces firestorm as row with regulator escalates ahead of earnings

Alibaba shares end down 4.36 per cent at 2-week low in Wall Street; recovers by 0.5 per cent in after hours trading

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Jack Ma speaks at the World Economic Forum in Davos. Photo: EPA

Alibaba Group executive chairman Jack Ma Yun is set to face a barrage of questions when the e-commerce giant reports quarterly earnings today, spurred by a government regulator's blistering accusation of widespread fraud and other illegal activities at the company's popular online shopping platform.

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A State Administration for Industry and Commerce (SAIC) white paper published yesterday by People.cn the news website of the Communist Party mouthpiece alleged that Taobao Marketplace, China's largest online shopping service, sold counterfeit goods as merchants without business licences were allowed to operate and run unauthorised stores.

Alibaba's shares fell heavily in New York, closing on Wednesday at US$98.45, down US$4.49 or 4.36 per cent on the day. It is the lowest finish for Alibaba since January 16. 

The shares recovered in after-hours trading on Wall Street to finish that session at $99 at 9 a.m. Hong Kong time.

In contrast, shares of rival JD.com, the second largest e-commerce company in China, closed in New York up over 2.5 per cent to $25.99.

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The document marked an escalation in the war of words between SAIC and Taobao, which had published an open letter on its official Weibo account on Tuesday accusing SAIC director Liu Hongliang of commissioning an unfair quality survey of goods sold on the platform and making public the results without giving online shop owners a chance to appeal.

This letter was later removed from Weibo by Taobao, which said it was penned by an anonymous employee.

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