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Taiwan orders Alibaba to sell stake in e-commerce platform

Taiwan ordered China’s Alibaba Group on Monday to dispose of its stake in a local e-commerce platform, Taobao Taiwan, citing a risk that users’ personal information might be transferred to the mainland.

The order adds to mounting pressure on Chinese companies in the United States and other countries over security concerns.

Taiwan and China split in 1949 during a civil war. They have no official relations but have thriving trade and investment ties. Taiwan closely watches those links to try to avoid being dominated by its giant neighbor, which has threatened to invade the island.

“Taobao Taiwan is operated by a British company but Alibaba Group’s stake in that company allows it to control the consumer-to-consumer platform in violation of Taiwanese rules,” the Ministry of Economic Affairs said.

Alibaba Group, headquartered in Hangzhou, southwest of Shanghai, is the world’s biggest e-commerce company by total sales volume.

The user agreement for Taobao Taiwan gives permission to “send the member’s transaction data back to the Alibaba Group server in China,” the ministry said, adding: “There may be an information security risk.”

“Alibaba’s 29 percent stake in British Claddagh Venture Investment Limited is below the 30 percent legal limit. But the shareholder structure allows Alibaba to control the British venture by vetoing decisions,” the ministry said.

Alibaba had six months to “withdraw the investment,” the order said.

Alibaba Group didn’t immediately respond to a request for comment.

Taiwan is among governments that have imposed curbs on the use of telecom equipment from Huawei Technologies Limited, the world’s biggest maker of switching gear.

In the United States, the White House is pressing the Chinese owner of TikTok to sell the short-video app due to concerns it might transfer users’ information to China.