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(Bloomberg) -- Alibaba Group Holding Ltd. lost its position as China’s most valuable e-commerce firm to eight-year-old upstart PDD, a watershed moment for an internet industry that Jack Ma’s iconic firm dominated for more than a decade.
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PDD Holdings Inc., the company best known for hit shopping app Temu and domestic bargains trailblazer Pinduoduo, rose 4% in US trading Thursday, pinning its market value at almost $196 billion. That outstripped Alibaba’s roughly $190 billion at the close in New York.
The once-inconceivable shift reflects the turmoil that engulfed Alibaba after Beijing in 2020 targeted the company and its once-outspoken co-founder, kicking off a sweeping crackdown on the powerful tech sector. It also signals the rise of a generation of upstarts from PDD to ByteDance Ltd., which are disrupting the traditional arenas of social media and e-commerce.
On Wednesday, Alibaba’s billionaire co-founder Ma stunned employees when he took to an internal forum both to praise PDD and exhort his company’s 220,000-plus staff to “correct course” and retake the momentum. To many observers, his call to arms — after three years of largely staying in the background — underscored the gravity of the situation.
“On hindsight, you can say that Alibaba was resting on its laurels given they had so much of a headstart but they didn’t execute or innovate as fast,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “When anti-monopoly came up and they couldn’t use their size to compel merchants to their platforms, they were suddenly caught flat-footed.”
Read More: Jack Ma Returns to Rally Troops After Alibaba’s Troubles Deepen
Alibaba, once China’s best candidate to become a trillion-dollar company, is trading around its lowest this year, at a fraction of its peak in 2020. The company is navigating turbulence both internally and externally, as a weaker-than-anticipated Chinese economic recovery and PDD undermine its once-dominant online retail business.
The company itself has endured upheaval, starting with the announcement of a plan to break up the corporation into six smaller pieces. Then-Chief Executive Officer Daniel Zhang stepped down and the company brought in two longstanding Ma confidantes, Joseph Tsai and Eddie Wu, to run the group. Months later, the pair announced they were shelving the much-anticipated spinoff and listing of its $11 billion cloud arm, a stunning about-face that called into question the company’s direction.