Gucci, Michael Kors quit anti-counterfeit group over Alibaba membership

Dive Brief:

Gucci America joined Michael Kors in walking away from the International Anti-Counterfeiting Coalition because Chinese e-commerce giant Alibaba Group—which is facing mounting criticism as well as lawsuits and Chinese and U.S. government warnings over the proliferation of counterfeit goods available on its marketplaces—has been allowed to join the group.
Not only has the IACC allowed Alibaba to join its ranks, but also is featuring founder Jack Ma as the keynote speaker at its spring conference this month, a development that prompted Michael Kors to leave, according to news reports.
Gucci and other luxury brands have sued Alibaba in New York federal court over counterfeits of their goods sold across the Alibaba platform, and threatened to back out of mediation after Ma said his company would rather fight in court and lose than settle and lose its dignity. The judge in that case persuaded the brands to stick it out despite those comments. The suit is ongoing.

Dive Insight:

Despite ongoing issues with counterfeits on its site, Alibaba last year was able to avoid the Office of the U S. Trade Representative’s blacklist of notorious markets. That was a victory of sorts, as the agency noted that Alibaba has taken “meaningful” steps to address the problem while also saying that the company must do more to improve its record in battling counterfeits on its sites.

The problem continues even as Alibaba has worked to increase the number of American brands that sell on its marketplaces, and luxury brands in particular are frustrated. Michael Kors called Alibaba "our most dangerous and damaging adversary" last month when it announced its decision to quit the IACC.

Alibaba continues to maintain that it’s working hard to address its issue, but brands contend that its counterfeit enforcement program is too slow, difficult to use and lacks transparency. “Brand owners continue to report Alibaba platforms, particularly Taobao, are used to sell large quantities of counterfeit goods,” according to the USTR’s December report.

The IACC has more than 250 members, including Apple and Chanel. "The IACC stands by its decision [to add Alibaba] and is committed to lean into the future and lead a coalition of the willing," IACC president Robert Barchiesi told the Associated Press by email. "Whether it's payment processors or online marketplaces, the choice is clear, they must be an integral part of the solution."

Alibaba last week reported fiscal fourth-quarter revenue rose 39% year over year to RMB 24.2 billion ($3.7 billion U.S.), with marketplace revenue rising 41% year over year to RMB 18.34 billion ($2.84 billion U.S.), beating Thomson Reuters average analyst estimates. Annual active buyers on Alibaba’s China retail marketplaces increased to 423 million, a hike of 16 million over the prior quarter, while mobile app users in March 2016 reached 410 million, an increase of 17 million over December 2015.