Chinese regulators fined Alibaba a record 18.2 billion rmb ($ 2.8 billion) after finding that the e-commerce group had abused its dominant position in the market.
The sanction, which was set at 4% of Alibaba’s revenue in 2019, concludes an antitrust investigation into the company founded by Jack Ma. It comes as Chinese authorities have stepped up their scrutiny over deal-making and anti-competitive practices in its once lightly regulated tech sector.
The market regulator said that since 2015, Alibaba has forced traders to sell exclusively on its online shopping platforms Tmall and Taobao.
Alibaba has used its “market position, platform rules and data, and algorithmic methods” to implement rewards and penalties for its “pick one of the two” policy, the regulator said on Saturday. .
In November, Chinese authorities suspended the initial public offering of $ 37 billion by Ma’s Ant Group, Alibaba’s sister payments and loan company, at the last minute.
Previously, the country’s competition regulators focused primarily on the country’s traditional industries and foreign companies. He imposed a then-record fine of $ 975 million in 2015 on the American chip design group Qualcomm
But last November, regulators began drafting the first antitrust measures to cover the online platforms that have become China’s most valuable businesses.
The State Administration of Market Regulation has ordered Alibaba to “take full rectification action” on its platform, in order to strengthen its legal controls and compliance. He gave Alibaba 15 days to submit a report detailing the changes to his “illegal behavior”.
Ali Baba declared having “sincerely accepted” the sanction.
“This is an important action to preserve fair competition in the market and a quality development of Internet platform economies,” the company said. “This reflects the thoughtful and prescriptive expectations of regulators.”
Alibaba added that it will strengthen compliance, improve its systems and ensure an open and fair operating environment for its merchants.
The Communist Party’s People’s Daily newspaper said the punishment reflected “normative correction for enterprise development, cleaning and purification of the industry environment, and strong defense of fair competition.”
A Chinese antitrust lawyer, who asked to remain anonymous, said the fine “was intended to teach Alibaba ‘don’t think you can do what you want,’ but [would] not materially harm the business ”.
He noted that the sanction was not as significant as it could have been and limited to Alibaba’s e-commerce operations, rather than its other operations spanning the entire industry.
In recent years, Alibaba has bought everything from supermarket chains to homeware retailers, giving it a share of around one-fifth of China’s total retail sales.
The fine alone will not significantly affect Alibaba’s operations. It had $ 48 billion in cash on its balance sheet at the end of 2020 and made a net profit of $ 24 billion last year.
Its biggest challenge comes from fast growing rivals. Upstart Pinduoduo surpassed its annual number of buyers for the first time last year, with 788 million people buying on its platform ahead of Alibaba’s 779 million.
The Meituan food delivery group has taken market share in Alibaba’s Ele.me and is striving to transport all types of goods from stores to consumers – another challenge for Alibaba’s e-commerce dominance.
As the sanction marks the end of the government’s antitrust review of Alibaba, Ma’s other interests remain under pressure. Authorities have yet to officially announce an agreement to restructure Ant and have new registration suspended at Ma’s elite business school.
