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Alibaba Replies on Piracy Claims

Posted by: Andy Reinhardt on March 3, 2011

By Bruce Einhorn

Following my post the other day about the difficulties at Alibaba, company spokesman John Spelich contacted me to point out a few things. First of all, he says Alibaba is not considering an IPO for Taobao, its popular consumer retail site. “We’ve said repeatedly on record that we have no plans to IPO Taobao,” he writes via e-mail.

Second, he disputes my contention that the U.S. Trade Representative’s placement of Taobao on its “notorious markets” list was a blow to the company. Yes, Taobao is once again on the list, as it was last year, but so is bitter rival Baidu. Spelich pointed me to Alibaba’s in-house blog, which highlighted this bit of good news in the USTR’s report: “While recognizing that Taobao is making significant efforts to address the availability of infringing goods through its website, it still has a long way to go in order to resolve those problems.” Moreover, Spelich says we should notice the kind words an industry group has for the company. “Alibaba should…be commended for their cooperation with videogame right holders in the removal of infringing items,” the International Intellectual Property Alliance writes in its report recommending that USTR keep China on the government’s Priority Watch List for copyright protection and enforcement.

Third, Spelich says Alibaba first revealed the fraud among suppliers on its B2B site last November. “We took action to terminate 1,200 paying members,” the company reported then, “not only those who have been reported and proved to be fraudulent but also members who demonstrate a high probability to commit fraud.”(See page 4 under “Gold Supplier.”)

Are we making too much of this latest news, then? Spelich says yes. “It’s old news,” he argues. He’s right that Alibaba revealed the fraud cases last year. This time, though, the company also said that about 100 of its salespeople were involved, either intentionally or through negligence. And this time the CEO and COO both stepped down to take responsibility.

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