Chinese eCommerce behemoth Alibaba (BABA), which has found itself in the crosshairs of a stinging anticompetitive crackdown by the PRC government, reported mixed Q4 results that included the company’s broadest earnings miss in over five years. Business is solid across BABA’s sprawling operations, as revenue surged by 64% yr/yr to RMB187.4 bln, but increasing costs tied to its growth initiatives are slicing into margins. Making matters worse, a $2.8 bln antitrust fine imposed by the PRC government steered BABA into the red-zone. The company recorded a GAAP net loss of RMB7.6 bln, putting its delicate positioning with the government under examination.A core aspect to BABA’s growth strategy is its mission to enlarge into less populated areas of China. This has required heavy investments in BABA’s logistics platform (Cainiao Network), but the move continues to pay off in the form of solid growth in the central commerce segment. Along with a wider digitization secular movement in China’s consumption economy, the expansion into rural and so-called lesser tier cities supported in driving a 74% revenue gain in BABA’s China commerce retail business to RMB123.2 bln (~66% of total revenue).The issue, however, is that the adjusted EBITDA margin in the core commerce business plunged to 19% from 30% in the year-earlier quarter. A primary culprit for the margin compression is BABA’s venture into the supermarket and food delivery businesses. Last October, BABA invested $3.6 bln to obtain a controlling stake in Sun Art, representing the company’s entrance into China’s brick-and-mortar grocery store market. At the same time, BABA is ramping up investments in its Ele.me platform, a Chinese version of DoorDash (DASH). These increasing costs and the ongoing consolidation of Sun Art bruised Q4 margins.