Fine with a fine: Alibaba accepts all-time high $2.8bn penalty from Chinese antitrust regulator

Apr 10, 2021 | BUSINESS

China’s antitrust regulators have hit Alibaba Group, the world’s largest e-commerce corporation, with an 18.2 billion yuan ($2.8 billion) fine, the highest penalty of its kind on record.

The fine imposed on Alibaba is nearly three times higher than the 6.1-billion-yuan penalty imposed on Qualcomm, the world’s largest supplier of mobile chips, six years ago.

Moreover, Alibaba has been obliged to file self-examination and compliance reports to the State Administration for Market Regulation (SAMR) for three years.

The company said it “accepts the penalty with sincerity and will ensure its compliance with determination.”

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“To serve its responsibility to society, Alibaba will operate in accordance with the law with utmost diligence, continue to strengthen its compliance systems and build on growth through innovation,” the company said.

The fine, which amounts to nearly 4% of the Alibaba’s revenue in 2019, comes after a months-long antitrust investigation. The case has reportedly set the precedent that will enable Chinese authorities to regulate the country’s Big Tech by means of anti-monopoly rules.

According to the SAMR, Alibaba had “abused its dominant market position in China’s online retail platform service market since 2015 by forcing online merchants to open stores or take part in promotions on its platforms.”

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The approach had been forcing merchants to choose one of two platforms, rather than being able to work with both. That allowed the e-commerce giant to bolster its position in the market and gain unfair competitive advantages, in breach of the country’s anti-monopoly law.

The penalty comes as the latest development in China’s crackdown on its technology companies. The country’s tech giants, particularly the ones operating in the financial sector, have been under close attention from the Chinese government, amid its increasing power.

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Chinese billionaire Jack Ma, the founder of both Alibaba and Ant Group, a financial platform that evolved from Alibaba’s payments service, Alipay, has recently become the focus of this intense scrutiny.

Ant’s long-anticipated stock market debut was halted in November after Chinese regulators introduced new rules on online micro-lending, a key part of its business. The China Securities Regulatory Commission also summoned Ma and other Ant execs.

The billionaire reportedly came under fire for criticizing Chinese regulators. Ma dropped out of the spotlight for months, evoking widespread speculation over his whereabouts after he gave a speech at a Shanghai conference, accusing officials of having a “pawnshop mentality” that stunted business growth and innovation in China.

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