Chinese media is reporting that Alibaba has filed a lawsuit against Hangzhou Jianshi Technology Co., Ltd., the company behind click farm site Shatui, for damaging the credibility of Alibaba’s Chinese marketplaces. The e-commerce giant has asked for 2.16 million RMB (312k USD) in compensation for fraudulent practices on their platform. If they win, Alibaba says they will use the money to establish an anti-click farm fund. This is the first time a Chinese e-commerce companies has tried to sue a click farm firm.
Despite its huge success, Alibaba still gets a lot of flack for allowing merchants on their platform to engage in various types of malpractice, including selling knock-offs, fake reviews, and fraudulent sales volumes. They have taken big steps to reduce counterfeit goods on the platform. However, they still have large problems with disingenuous reviews, inaccurate sales numbers, and the click farms that enable both of them.
Click farming is used in China to inflate transaction volume, create bogus ratings, and leave fake reviews. With search results determined by a mix of these three factors, more and more merchants are hiring click farms to boost their popularity.
The fraudulent practice first become popular on Taobao and has become a common tactic for many of China’s online services. A grey market has formed with online services like Meituan-Dianping, Ctrip, and Didi all embroiled in similar click farming scandals.
Alibaba’s lawsuit against Shatui follows a government crackdown on the site in April of this year. Alibaba has decided to pursue a civil suit because the site was only subjected to an administrative penalty of around 100k RMB. This is far less than the 2 million RMB Alibaba claims Shatui has made from their fraudulent practice.
Since March this year, Shatui has helped more than 3000 retailers on Taobao and Tmall to doll up their shop credits and reviews, generating 26.39 million RMB in transactions.
Alibaba’s data show that in the one-month period between February 15 to March 15, total click farming has deprived the display priority of around 220k Taobao retailers. The fact that Shatui only serviced 3000 stores shows they’re only the tip of the iceberg.
State authorities and Internet companies are cooperating to address the problem. The National Development and Reform Commission has signed a memorandum with Alibaba for improving the construction of busines credit rating system. In October this year, seven state authorities and eight internet companies including Alibaba, Tencent, Baidu Nuomi, and Didi all entered an agreement to share information on click farming.
Image Credit: Alibaba