One of the biggest news stories to recently come out of China was last week’s announcement that Chinese regulators had launched an investigation into “alleged monopolistic practices” by Alibaba. The revelation of this antitrust investigation sent shares of Alibaba and its rivals Tencent Holdings, Meituan, and JD.com into freefall, with the companies losing nearly $200 billion in value since last Thursday. Over the course of 2020, the central government in Beijing has gradually tightened the leash on major tech players, seemingly concerned about their expansive growth into areas like media, gaming, and education. One area of concern for Chinese government regulators is the degree to which some of the biggest tech companies like Alibaba and Tencent have become heavily vertically integrated — creating enclosed ecosystems that encompass (and seamlessly integrate) everything from e-commerce and social media to film and television production and distribution. This concern has also extended into the financial realm, where Chinese regulators also recently ordered the Alibaba-affiliated Ant Group to overhaul significant portions of its operations and put its business focus back on its "original" payments services. With Alibaba firmly in the crosshairs, some commentators have predicted that Beijing is on the verge of a stronger, albeit targeted, tech crackdown in 2021, with the primary focus on e-commerce in general and practices like predatory pricing in particular, making an early example of Alibaba. As analysts at Nomura put it in a note, “We think [China’s State Administration for Market Regulation] might want to use [Alibaba’s] case as a precedent to send a message to the rest of the industry that the authority is determined this time to address the [pricing issue.]” Ultimately, Beijing’s latest crackdown on the country’s tech champions may amount to a show of force, the payment of fines, or some minor changes in policy and nothing more. But the fact that the central government focused most strongly on Alibaba has already caused some reputational damage and has likely repercussions in the luxury industry. Alibaba has taken great pains and invested heavily in recruiting major global luxury brands onto its Tmall Luxury Pavilion, an effort that finally began to pay off over the past two years. Currently, the platform boasts more than 200 leading luxury and designer brands – up from 150 before the Covid-19 outbreak – and has aggressively moved to fend off competition from rival JD.com, which also claims to host more than 200 luxury brands. The question now, as brands prepare for a crucial 2021 following a challenging 2020 defined by Covid-19, is whether putting all, or many, of their eggs in the Alibaba basket will be too big a risk. Many of the brands already on Tmall Luxury Pavilion have deep ties with Alibaba across multiple branches of its broader ecosystem, sponsoring streaming programs on Alibaba-owned Youku, collaborating with celebrity livestreamers on Taobao Live, or accepting Alipay in their online and brick-and-mortar stores worldwide. Presumably, Alibaba rivals are looking on with a mix of concern and excitement. While JD.com and Tencent may lean more to the concerned side, given the breadth of their tech offerings and — in Tencent’s case — involvement in media production, younger platforms like Pinduoduo and Bilibili may take the opportunity to more strongly court luxury brands. According to KeyBanc Capital Markets analyst Hans Chung, the biggest beneficiaries of the antitrust investigation into Alibaba could be JD.com and Pinduoduo, with Chung noting that the investigation is “mostly centered around exclusive agreements with merchants on the Tmall platform, which prohibit them from opening stores on rival platforms.” Chung added that “Pinduoduo could stand to benefit if the unfair practice is removed ‘given its customer scale and [return on investment] are attractive to merchants.’” Considering it already has deals with major luxury brands, JD.com could obviously gain as brands potentially look to invest less in Alibaba in the next year and more into other platforms, but Pinduoduo is an interesting choice for the analyst Chung. The five-year-old, U.S.-listed Pinduoduo is a social e-commerce platform with a higher valuation than HSBC, Uber, or Sony (and double that of Baidu) and has a stated goal of becoming “a combination of Costco and Disneyland.” Pinduoduo initially fueled its explosive user and revenue growth through a laser-like focus on price-sensitive consumers in lower-tier cities who have — it’s regularly argued — more leisure time and strong demand for social commerce and shoppable entertainment. Yet unlike Tmall and JD.com, which have spent years cultivating relationships with reluctant luxury brands before gradually getting them on board with official presences on their platforms, Pinduoduo has no official partnerships with any luxury brand or group. And the company’s brash way of doing business is likely to rub some the wrong way, especially those that would rather destroy unsold merchandise rather than discount it. So while Pinduoduo may benefit from more spending on lower-priced items among consumers in lower-tier cities, it may not see interest among more premium brands. Ultimately, we will have to wait and see whether a growing platform like Pinduoduo can attract the attention of more luxury brands, whether these brands stick with the Alibaba status quo, or whether they start investing more in platforms with strong e-commerce growth potential, such as Bilibili, which has benefited from content-commerce diversification among luxury automakers and beauty brands in particular over the course of 2020. Clearly, though, even a whiff of an antitrust investigation for a powerhouse like Alibaba has sent shockwaves through China’s tech industry, and for any luxury brand invested in e-commerce and online marketing in China, what happens in the next couple of weeks will have a major impact on their planning for the year ahead.