E-commerce and entertainment giant Alibaba said that the Chinese government’s increasingly negative attitude towards big tech is giving it near term problems. But the company was able to deliver huge profits of more than $9 billion in the three months to December.

In the period, which represents the third quarter of its financial year, Alibaba’s revenue was RMB221 billion ($33.9 billion), an increase of 37% year-over-year. The company uses multiple measures of profitability. Net income was RMB78.0 billion ($11.95 billion), while a non-GAAP calculation showed net income at RMB59.2 billion ($9.07 billion), an increase of 27% year-over-year. Positive free cash flow was over $14 billion by either standard.

China’s wider economy generally has enjoyed a V-shaped recovery from the coronavirus crisis. And Alibaba’s October-December business highlights included: reduced losses at video streaming service Youku; expanded revenue for its online games businesses; and positive cash flow for the first time from Alibaba’s cloud computing business. All of these could be attributed to the growing digitization of the Chinese economy, a side-effect of coronavirus and lockdowns.

While the economic picture in China may be brightening, Alibaba has recently been buffeted by a series of regulatory changes. These appear to see central government challenging Alibaba’s scale. They may also crimp the company’s pricing power and its ability to use its data across different business sectors.

On Dec. 24, 2020, the maneuvers culminated in a formal notice from the State Administration for Market Regulation announcing “an investigation pursuant to the Anti-Monopoly Law.”

Speaking on a conference call following the results announcement on Tuesday, CEO Daniel Zhang said that the company is “fully cooperating with the SAMR,” and “(approaching) the investigation with a cooperative and open mindset.”

But Zhang also acknowledged that “the changing regulatory environment presents near term challenges to Alibaba.. and a chance to reassess the business.” Zhang said that financial affiliate Ant Group is developing a “rectification plan,” following the cancelation of Ant $36 billion IPO in November. “We cannot make a full assessment of impact of (new fintech regulations) on Alibaba,” he said.

While Zhang spoke frankly about Ant and the regulatory outlook, he did not address the status of Alibaba’s founder and former chairman Jack Ma.

Lurid rumors swirled after Ma appeared to go missing for nearly three months following a public speech in October in which Ma criticized the banking sector regulator. His disappearance from public view raised questions as to whether Ma was at liberty or had been detained. Ma resurfaced in January at an online presentation for an African entrepreneurship scheme.

Alibaba shares which are traded in ADR form in New York and in ordinary form in Hong Kong, have been a wild ride since the onset of the regulatory squeeze. They fell from a peak of HK$309.4 in late October, to a low of HK$167.50 in late December. On Tuesday, they traded up 3.5% in Hong Kong to close at HK$260 apiece. At that price, Alibaba has a market capitalization of HK$5.63 trillion or $726 billion.