Getty ImagesJack Ma, the executive chairman of the Alibaba GroupThe unusual public brawl between a Chinese regulator and Alibaba Group Holding Ltd. over the sale of counterfeit goods is intensifying, as the company and government engage in an escalating war of words. The trouble started late last week, when China’s State Administration for Industry and Commerce (SAIC), the nation’s business regulator, openly lambasted Taobao, Alibaba’s largest e-commerce platform, for having the lowest proportion of authentic brand goods sold on its site in a recent survey. Days later, Taobao’s microblogging account forwarded a post by the owner of an online store on its platform, with the author questioning a top official in the SAIC by name, accusing the person — Internet-monitoring director Liu Hongliang — of singling out Taobao in a “precision attack,” using data with an inadequate sample and poor gathering techniques. On Wednesday morning, the SAIC responded with a white paper on Alibaba, blaming it for a lack of strict checks on the sellers using its e-commerce platforms, as well as criticism of the business practices of Taobao store owners. Taobao countered with protest but also an announcement it had established a special team of 300 people to crack down the counterfeits. Alibaba founder and Executive Chairman Jack Ma said that counterfeiting has become an increasingly serious issue in China, but he added that Taobao wasn’t the one creating those counterfeit goods. “Taobao has no choice but to admit fault and try to tackle” the issue, Ma said, at the same time adding that society must deal with the problem rather than “blaming each other, with each [party] doing things in its own way.” Meanwhile, Taobao said it had filed a formal complaint to the SAIC, accusing the official Liu of being “emotional” in enforcing the law and following “inappropriate procedures” in the case. The fight escalated further Thursday, with the state-run People’s Daily siding with the SAIC and warning companies not to misuse their wealth and prestige. Other media took a more neutral stance, however, with the Southern Metropolis Daily — also run by the government — saying the business regulator, Taobao and both the sellers and buyers “who deliberately purchase counterfeits” were all responsible for the overflow of bogus branded goods on the Chinese market. “The main source of fakes is offline, “ Jiang Qiping, an official at China’s Academy of Social Sciences, was quoted as saying. “They need to manage the origin of the problem.” Meanwhile, the public nature of the spat has surprised some observers, as companies — even private ones — almost never criticize the government. Looking at the unusual nature of Alibaba’s argument with the SAIC, the Southern Metropolis Daily report quoted one lawyer as suggesting the development showed China was reforming. “The government can no longer hold an ultimately powerful position to dictate to companies,” he said. Still, the bold comments defending Taobao may be worrying some investors. Between the on-going fight with the SAIC and plans by shareholder Yahoo Inc.YHOO, -3.19% to spin off its stake in the company, shares of AlibabaBABA, -4.36% plunged 4.4% in New York on Wednesday, one day ahead of the announcement of its quarterly earnings results. Laura He