Alibaba has found itself in a series of negative situations over the past month, a surprising backlash from its acceptance as a member of the International Anticounterfeiting Coalition (IACC).
Key members of the IACC, including Gucci-owner Kering Group, Michael Kors and Tiffany, have quit in protest. Further controversy arose when the Chinese retailer was suspended from its membership after reports came out revealing several links between IACC president Robert Barchiesi and Alibaba, including that he owns shares in the business.
Alibaba has defended its place within the organisation repeatedly and passionately, even speaking at the annual conference for the organisation last week. The business says it’s taking significant investments to reduce the amount of counterfeit goods sold on its online marketplaces. It’s an important step for Alibaba as it looks to improve its image on the global market.
The big bad wolf?
Alibaba isn’t the big bad wolf to all brands either, the company also has many partnerships with luxury brands to sell products to its expansive Chinese audience. Burberry, for example, opened a store on Alibaba back in 2014. With Alibaba seemingly cooperative, it leaves most wondering why luxury brands so unwilling to work with them.
Rob Holmes, CEO of IPCybercrime, has spent the past 20 years investigating online fakes, helping major brands in cases against the online marketplaces, and offers an insight into the now tainted attempt from Alibaba to rekindle its relationship with luxury brands.
“I began working for my father in 1982 at the age of 12. He was the guy on the Jersey Shore and Canal Street in New York City who confiscated the fakes. My first gig was making undercover buys on the boardwalk. I grew apart from my father and followed other career paths in my early twenties which led me to Los Angeles seeking employment. In 1995 my father referred me to one of his friends and I started working as an investigator. Ever since the beginning, I was working to fight fakes online, back before Paypal and right around when eBay was starting to become a thing.
"Over the last ten years or so, I've become known as the expert investigator in third-party liability cases in the counterfeiting industry. My team and I led the investigation that led to the first ever ISP to be held liable for counterfeiting (Louis Vuitton v. Akanoc) and the first ever marketplace to be held liable (Chloe v. Tradekey). So, naturally, when Kering (Gucci's parent company) decided to put together a case against Alibaba, there was only one choice,” he says.
A case of David and Goliath
No one would deny that these brands weren’t right to take a legal stand against the online giants profiting from fakes. It’s a classic David and Goliath story, which is hard to not sympathise with. But the recent move by Alibaba was intended to be positive.
“I believe that the anti-counterfeiting industry, as any enforcement industry, must have a safe haven to strategize together that is not in public. Our legal opponents are not necessarily evil but marketplaces like Alibaba are often our opponents in legal situations. Look, police organizations don't allow defense attorneys to become members. Do the Yankees let the Red Sox into their clubhouse? No. It's just as ludicrous,” he argues.
"Don't let them office with you"
And when it comes to the adage ‘keep your friends close but your enemies closer? “I am one of the top counterintelligence experts in the world. I believe that phrase is for naive people who watch too much television. It's perfectly fine to let the fox watch the hens from outside, but what fool let them inside the hen house? Meet with them. Befriend them. But don't let them office with you.”
With additional allegations of a more serious nature being thrown into the mix, namely suggestions that there are conflicts of interest in Alibaba’s membership and Robert Barchiesi’s presidency, it perhaps makes more sense to enforce distance.
"I see evidence of corruption"
Of the conflict issue, Holmes says, “I do believe there are a number of conflicts with the officers and the board, which I'd like to keep private. I can tell you that I see evidence of corruption. But I'd prefer not to air our dirty laundry on the details regarding names.”
It’s tough talk from Holmes and the side representing the brands. Alibaba, subtly, has criticised this and suggested that creating a media storm to perpetuate the issue is financially benefiting businesses like IPCybercrime.
“In this world, you have behemoths who believe they can throw their weight around to get their way. The problem is that, no matter what a company like Alibaba does, there is one secret weapon they cannot trump. That is the truth,” defends Holmes.
Brands versus marketplaces
The special membership awarded to Alibaba was, according to the IACC, a membership set up following years of lobbying from eBay, rather than emanating from the Chinese retailer. Ebay hasn’t taken up the membership, leaving Alibaba as the key enemy in the brands versus marketplace argument.
Holmes says that while all are guilty of facilitating fake goods commerce, there are some that are worse than others. “I believe there are some marketplaces that built their entire business model on the facilitating of counterfeit goods. Please research my case Chloe v. Tradekey where we proved it in federal court. I can't speak on Alibaba because of my position on the case, but you can bet I wasn't hired because they fight counterfeiting.”
"No crime can be stopped, but only curtailed"
So, what can be done if Alibaba isn’t allowed to participate in the brands’ safe place? What is next for the battle that is seemingly fought from only one side and yet has ended up messier than where it began?
“No crime can be stopped, but only curtailed. Managing crime is a difficult art and requires many moving parts and phases. Just like theft and violence, if none enforced, there would be more of it. The only way for crime, which includes counterfeiting, to go away is for there to be no more dishonest people in this world. And we both know that ain't happenin’,” concludes Holmes.
The Drum has contacted Alibaba for its side of the story repeatedly throughout the past months’ events but, at the time of publishing, hadn’t received a response.