The Chinese e-commerce giant describes how its Operation “Cloud Sword” led to the arrest of more than 300 suspected counterfeit gang members in 164 investigations.
This is a contributed essay by an Alibaba senior executive on how the e-commerce giant’s cloud computing is being used to fight crime in China.
To understand how big a problem counterfeit and pirated goods represent to business, remember the number $461 billion. That’s the dollar amount that the Organization for Economic Cooperation and Development estimated for last year’s global trade in fake goods. It’s also right around the level of Sweden’s gross domestic product.
It’s not just the high total that concerns brands, e-commerce platforms and authorities. It’s that the figure — about 2.5 percent of total global trade — has nearly doubled since 2007. As the world’s leading manufacturing center for authentic products, it is unsurprising that China has also been a source of a large share of counterfeits entering the market.
Alibaba’s Taobao, the world’s largest e-commerce platform, has millions of honest vendors selling billions upon billions of yuan of authentic goods every year. But there’s also a minority who traffic in counterfeit goods. That’s bad for Alibaba’s customers, reputation and business. We have long been committed to identifying and eliminating these bad actors from our platform, and it remains a top priority.
While our efforts in intellectual property enforcement have been effective in sharply reducing counterfeit activity, we also have found ourselves engaged in a game of “whack-a-mole” with counterfeiters who go to great lengths to hide their true identity. Driven by attractive profit margins, they’ve tried to adapt to and counter our technological and other efforts to root them out.
We have recently taken a more holistic and technology-driven IPR-enforcement approach, deploying a new app designed to discern patterns in the data, and thereby enable us to better identify and pursue counterfeiters. This is making it much more difficult for these illicit actors to hide.
Last year, in a three-month pilot called “Cloud Sword,” we improved our data modeling to increase the accuracy in finding and deleting listings for counterfeit products. We also improved our network DNA source-tracing to more effectively crack down on counterfeit sellers and their entire supply chain, from upstream to downstream. At the same time, we increased our data quality, enhancing the management of leads for cases we bring to the authorities.
The pilot program involved 11 cities in Zhejiang Province. We provided 385 leads to the Zhejiang Province Economic Investigation Team, leading to the arrest of 300 people under 169 separate cases, involving goods valued at RMB816 million.
We launched an enhanced version of “Cloud Sword” this year, and earlier this month, the China Patent and Trademark Office of Zhejiang said that the program had led to a crackdown on 417 manufacturing and sales locations of counterfeit goods amounting to RMB1.43 billion. Based on that success, we have formed the “Cloud Sword Alliance,” which will extend its footprint beyond Zhejiang, adding Shanghai and the provinces of Anhui, Jiangxi and Jiangsu.
We’ve been saying for some time that Alibaba is a data company as well as an e-commerce company, and “Cloud Sword” is a living, breathing example of that.
We’re doing everything from collating complaints from customers and rights-holders to using optical character recognition and analysis of photos and logos to identify online fakes. In addition to certain registration information, we’re using artificial intelligence and machine learning to pinpoint their location and unmask them. Though they’re selling suspected fake goods, they need to get paid in real money, so we also have their Alipay account information, bank details and other financial information. But we’re not stopping there — we’re calling law enforcement to nab those engaged in criminal activity.
What sets Alibaba — and “Cloud Sword” — apart from other IPR enforcement efforts, is that we are one of the few e-commerce platforms — if not the only one — to also have a proactive, offline investigations program. That means we’re able to use our “big data” and analytics to help law enforcement not just identify and go after those who traffic in counterfeit goods, but also ensure that when they apprehend them, they have strong evidence to prosecute them. We even cut off the upstream source where counterfeit goods are produced.
“Cloud Sword” is just one IPR enforcement action we are taking to combat counterfeiting. Many of our anticounterfeiting measures — proactive and otherwise — depend on close cooperation with and input from brand owners, whose expertise is critical to effectively protecting their brands on our platforms. Big data alone isn’t going to bring an end to all counterfeiting of brands and products on anyone’s platform. But the good news is that its use greatly evens the odds of catching counterfeits and counterfeiters, maybe even predicting where they’re most likely to appear.
And everybody wins — except the counterfeiters.
Matthew Bassiur is head of global intellectual property enforcement at Alibaba Group. In that role, leading a team that works with international brands and retail partners, industry associations, government regulators, law enforcement and other organizations to advance Alibaba Group’s anti-counterfeiting and IP rights protection efforts. He has also worked at Pfizer, whe he was VP and deputy chief security officer, and at Apple, where his responsibilities included building and overseeing an investigative program into complex thefts, frauds, leaks, threats and cyber-related crimes, as well as developing and implementing Apple’s civil, criminal and administrative anti-counterfeiting program. Reach him @alibabagroup.