Alibaba is suing two merchants on its peer-to-peer platform Tmall for selling counterfeit goods. The two sellers are allegedly selling fake Swarovski watches and Alibaba is claiming 1.4 million yuan ($201,482) in damages. This is the first time Alibaba is taking such a drastic measure against sellers on its site – and it comes after a series of protests. In May, Gucci, Tiffany, and Michael Kors quit the Anti-Counterfeiting Coalition in protest of the retailer joining the group in May. Shortly after, Coach abandoned its Tmall store. And in December, the Office of the United States Trade Representative placed Alibaba on its Notorious Markets List, which identifies “prominent online and physical marketplaces that reportedly engage in and facilitate substantial copyright piracy and trademark counterfeiting.”

Suing the two watch retailers was Alibaba’s most definitive stance to date about counterfeits, L2 research suggests that the retailer has been making efforts to reduce counterfeits (or at least unauthorized sales) on Taobao. The graph below shows that the number of product listings for major Watch & Jewelry brands (mostly listed by third parties) have been drastically reduced between February and May 2016. Chow Tai Fook, Swarovski, and Omega listings decreased the most.

taabao

L2's Daily Insights in Your Inbox.