The stock price of Chinese e-commerce giant Alibaba Group tumbled 8.8 per cent on the New York Stock Exchange on Thursday, closing at a three-month low of US$89.81. The stock plunged up to 11 per cent to the intraday low of US$87.36 after it posted fourth-quarter revenue results that fell short of analyst forecasts and its war of words with the Chinese regulators escalated over a report alleging counterfeits sold on Alibaba platforms. Alibaba Group vice-chairman Joe Tsai dismissed the State Administration for Industry and Commerce (SAIC) report as flawed and threatened to make a formal complaint. “We believe the flawed approach taken in the report and the tactic of releasing a so-called white paper specifically targeting us was so unfair that we felt compelled to take the extraordinary step of preparing a formal complaint to SAIC,” Tsai said. The comments came at an earnings conference call late Thursday, in which Tsai said Alibaba’s revenue missed estimates because it spent more money trying to attract customers through mobile phones. Alibaba missed the expected quarterly revenue, which came to 26.2 billion yuan (HK$33 billion) in the quarter ended December 31, compared with the 27.6 billion yuan average of 25 analyst estimates, the Hangzhou-based company said in a statement. Net income fell 28 per cent to 5.98 billion yuan because of compensation expenses and a one-time charge, lower than the 8.8 billion yuan average of 19 analysts’ estimates compiled by Bloomberg. Over the last two days, since its problems with China’s business regulator surfaced, Alibaba has fallen US$13.13, or 12.75 per cent. Shares continued to bleed in after-hours trading in New York at US$89.60 at 8am (Hong Kong time). The war of words between Alibaba and SAIC erupted on Wednesday after the administration published a white paper that alleged that Taobao sold counterfeit goods by allowing merchants without business licences to run unauthorised stores. We believe the flawed approach taken in the report and the tactic of releasing a so-called white paper specifically targeting us was so unfair that we felt compelled to take the extraordinary step of preparing a formal complaint to SAIC Joe Tsai, vice-chairman, Alibaba Group The feud took a nasty turn on Thursday, with the release of a transcript of a recording purportedly revealing the regulator justifying its investigation of Alibaba offshoot Taobao.com. State-run Xinhua’s official microblog carried the text, but there was also no official confirmation of the recording. News portal Thepaper.cn also carried the transcript, but said it could not verify it. The transcript was later pulled from both online outlets. The transcript quoted SAIC director Liu Hongliang as telling his staff it was “normal” to penalise Alibaba “thousands of times a year” and that the “combined annual salary of all the staff on our team is less than what a worker [in Alibaba] gets paid each month”. “Some of the comrades may say director Liu is biased against Alibaba,” Liu was quoted as saying. “I have no bias and I will prove with my actions that I am carrying out my responsibilities.” Alibaba responded by accusing Liu of commissioning an unfair quality survey of goods sold on the platform and making public the results without giving online shop owners a chance to appeal. Taobao said it would file a formal complaint with SAIC but an administration spokesman said on Thursday that it had not received a formal complaint against Liu from the company, online portal Sina reported. The Ministry of Commerce also entered the fray, saying on Thursday that it would step up regulation of e-commerce amid the SAIC-Alibaba row. Ministry spokesman Shen Danyang said the move was aimed at overhauling the entire sector. Shen said the ministry investigated more than 11,000 violations in the fast-growing industry and closed 3,400 websites last year. Xinhua, too, waded in, publishing a report on its website on “the woes behind the glory of China’s online retailers”, problems that included “a low-price culture”, “vicious competition,” and “fake goods”. That came on top of a commentary released through the official People’s Daily WeChat account in which the Communist Party mouthpiece reminded Alibaba that selling substandard goods was as illegal as producing them. The commentary called on the e-commerce giant and other big companies to remember their corporate social responsibilities and to stop “bullying others by flexing their financial muscle”. It also criticised SAIC for failing to release its findings on Taobao earlier. SAIC’s white paper was based on discussions between Alibaba and the regulator in July, and the administration admitted that the document had been withheld to “avoid hindering” the group’s record-breaking initial public offering in the United States.