After the rampant speculation over Alibaba co-founder Jack Ma's whereabouts (and recent reports that he's just lying low), the company's announcement that it is scotching a well-established business unit is getting little attention.

Alibaba said Tuesday that it is shuttering its Xiami Music service effective Feb. 5. It said that it's doing so "because of adjustments in business development." It wasn't immediately clear what exactly that meant.

Xiami Music is a veteran of the streaming scene in China. It was founded in 2006, went live in 2008, and was bought by Alibaba in 2013. The company bundled it along with a peer service, Ali Planet, inside its Ali Music business unit. It discontinued Ali Planet in 2016.

Alibaba's dominant position in e-commerce means its results are closely watched as a barometer of overall consumer sentiment
Alibaba's dominant position in e-commerce means its results are closely watched as a barometer of overall consumer sentiment AFP / YE AUNG THU

Such services have stirred controversy in China over allegations of copyright infringement. The country's government started to crack down on music pirating in 2015.

Competition in the streaming space began to intensify in 2016 with the entry of Chinese tech conglomerate Tencent Holdings. According to a report from CNN, Tencent's streaming platforms now boast 430 million monthly active users, dwarfing Xiami Music's less than 7 million.

Alibaba has deeper problems than an undersubscribed music streaming service.

Jack Ma has drawn the ire of Chinese government officials for his criticism of the country's oversight of the finance industry. Some observers say his critique was a key factor in the cancellation of Alibaba unit Ant Financial's IPO. Meanwhile, Alibaba as a company is currently the subject of an antitrust investigation launched by The State Administration for Market Regulation over alleged monopolistic practices.

This article originally appeared in The Motley Fool. The Motley Fool has a disclosure policy.

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