Shares in Alibaba Group Holdings fell 5.7% after the Wall Street Journal reported that the Chinese tech giant's cloud division has been summoned by Shanghai authorities in connection with a theft of police data.
An anonymous hacker had earlier this month claimed to have obtained personal information of more than 1 billion Chinese residents from the Shanghai police.
A dashboard for managing the database was left open on the internet for over a year without a password, which made it easy to access and retrieve its contents, the Wall Street Journal said, citing cybersecurity researchers.
Based on scans of the police database, the researchers said the data was hosted on Alibaba's cloud platform, according to the report.
The Shanghai government and spokespersons for Alibaba as well as its cloud division did not immediately respond to Reuters requests for comment.
Since the theft was discovered, Alibaba has temporarily disabled access to the breached database and launched an inspection, the report said.
Government authorities are yet to confirm the breach occurred. Yet the incident made waves online in China and at one point became a trending topic on Weibo, the country's Twitter-esque social network.
The alleged breach comes as Chinese regulators tighten policy concerning data privacy and strengthen their oversight over the country's technology giants.
China had late last year passed the Personal Information Protection Law, a major framework that dictated the proper methods for storing and collecting data. It was rolled out alongside the Data Security Law that governed data collection.
Alibaba's stock price opened on Friday 5.5% below its previous day closing price in Hong Kong. The company's U.S. listed shares had closed down 3.6% on Thursday.