Alibaba Rival Shein's IPO Plans Under Fire: Congressional Inquiry into Company's Data Privacy and Forced Labor

Alibaba Group Holding Limited BABA, alongside other Chinese-owned e-commerce platforms like ByteDance Ltd owned TikTok, PDD Holdings Inc PDD Temu, and Shein, is under scrutiny by U.S. lawmakers for data privacy practices and its relationship with the Chinese Communist Party. 

The inquiry, led by Reps. Cathy McMorris Rodgers and Gus Bilirakis come as Shein, a fast-fashion giant, moves closer to a U.S. initial public offering. 

The lawmakers, concerned about the rising popularity of these platforms in the West, have sent letters questioning the risks posed to e-commerce, consumer safety, and data privacy and security, CNBC reports.

Also Read: Alibaba Rival Temu Takes Shein To Court: What Does This Mean for US Fashion Retail?

A Shein spokesperson confirmed with CNBC that it received the committee's letter and plans to respond. 

This scrutiny is in addition to the existing concerns over Shein's use of forced labor in its supply chain. The focus of McMorris Rodgers and Bilirakis is primarily on data privacy, an area within the remit of the House Committee on Energy and Commerce, known for its mandate on consumer protections and foreign commerce issues.

The lawmakers are probing Shein's data protection practices, including whether it collects sensitive user information such as biometric, genetic, and health data and religious and political beliefs. 

They also question Shein's stance on the situation in China's Xinjiang region and the integrity of its supply chain regarding forced labor.

Lawmakers have raised concerns about data security, especially in light of Chinese laws mandating tech companies to provide government access to user data. 

Past incidents involving companies like TikTok heighten these concerns, casting doubt on American users' data security.

Price Action: BABA shares are trading higher by 1.98% at $74.79 premarket on the last check Thursday.

Also Read: Amazon Ramps Up Efforts in China to Tackle Rising Competition from Temu and Shein

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.