Alibaba shares fell sharply on Friday, dropping 4.8% to HK$90.4 and briefly touching a new 52-week low of HK$89.2 as investors digested two significant headwinds: a formal allegation from AI developer Anthropic and a legal challenge against the U.S. Department of Defense.
The first and most immediate catalyst was a letter Anthropic sent to U.S. senators and White House officials that accused operators linked to Alibaba's Qwen AI lab of deploying nearly 25,000 fraudulent accounts to submit tens of millions of requests to Anthropic's Claude model. Anthropic said those requests systematically targeted the model's most advanced capabilities, including agentic reasoning and software engineering, and described the episode as the largest known AI distillation attack it has encountered.
Shortly after the AI controversy surfaced, Alibaba initiated legal action against the U.S. Department of Defense seeking to have itself removed from the Pentagon's "Chinese Military Companies" list. That designation carries the prospect of procurement bans and investment restrictions, creating an additional layer of regulatory risk for the company.
Market reaction to the pair of developments was severe. Alibaba's stock is trading roughly 50% below its October 2025 peak of HK$186.2, reflecting heightened investor concern around both reputational damage tied to the AI allegation and the potential economic consequences of the Pentagon listing.
Compounding the legal and reputational issues, Alibaba's core e-commerce business received little support from recent retail indicators. China's 618 shopping festival - a key sales period for the company - reported notably weak outcomes, with growth slowing sharply and offering limited offset to the negative headlines.
The broader Hong Kong equity complex has also been under pressure. The Hang Seng Index slipped below the 23,000 level in the prior session amid worries about Chinese technology names and substantial net selling by mainland Chinese investors through the northbound connect channel. That market backdrop has reduced the likelihood of sympathy buying for Alibaba.
Peers in the competitive Chinese e-commerce sector have not provided relief. Competitors such as JD.com and Meituan are also experiencing headwinds, leaving Alibaba without an immediate sector-led lift for its shares.
Contextual note: The facts above reflect the information available regarding the Anthropic accusation, Alibaba's lawsuit against the U.S. Department of Defense, recent trading moves, and 618 sales performance. Where details are limited in the available information, this article reports the stated claims and market reactions rather than drawing further inferences.