An e-commerce platform linked to Alibaba Group, the world’s biggest e-commerce giant has been declared as a potential security risk by Taiwan.
Taobao Taiwan is operated by a separate company, British Claddagh Venture Investment Ltd. However, Alibaba Group’ has an ownership stake in that company that allows it to control the consumer-to-consumer platform which is a clear violation of Taiwanese rules, the Ministry of Economic Affairs said.
The concern is that the user agreement with Taobao Taiwan gives permission to “send the member’s transaction data back to the Alibaba Group server in China,” the ministry said. “There may be an information security risk.”
British Claddagh has six months to ask permission to operate as a Chinese company or else “withdraw the investment,” the ministry said.
Taiwan has now told its operator to register as a company from the rival mainland or dispose of its ownership stake. Also, there is mounting pressure on Chinese companies in the United States and other countries who believe that the Communist Party of China is riding piggyback on these companies to access data of users.
Alibaba Group is based out of Hangzhou, southwest of Shanghai and has 29% stake in British Claddagh which is below the 30% legal limit. However, it gives the Chinese company to control it by vetoing decisions.
In the last six months, China is facing a global opposition due to its unethical business practice and the biggest causality so far has been the telecom equipment manufacturing giant Huawei Technologies Ltd.
The U.S. government has declared Huawei a security risk, and the Trump White House is pressing the Chinese owner of TikTok to sell the short-video app. This pressure is being applied due to fear of transfer users’ information to China.
President Donald Trump issued a demarche barring U.S. companies from dealing with TikTok and WeChat, a popular Chinese messaging service.