Chinese regulators yesterday hit e-commerce giant Alibaba Group Holding Ltd (阿里巴巴) with a record 18.2 billion yuan (US$2.78 billion) fine over practices deemed to be an abuse of the company’s dominant market position.
Alibaba, the Chinese e-commerce leader cofounded by Jack Ma (馬雲) and one of the world’s most valuable companies, said it accepted the penalty and pledged to outline plans yesterday for bringing its operations into compliance.
The fine appeared to cap a government crackdown on major Chinese tech platforms, and Alibaba in particular, over allegations of anti-competitive behavior and misuse of consumer data.
Photo: Bloomberg
The Chinese State Administration for Market Regulation said it assessed the fine after concluding an investigation into Alibaba that began in December last year.
The probe centered on Alibaba’s practice of forbidding merchants who wish to sell their wares on its online marketplaces from simultaneously offering them on rival e-commerce sites.
“Since 2015, Alibaba Group has abused its dominant position in the market” with the exclusivity requirement, the regulator said.
The requirement harmed competition, innovation, and the interests of merchants and consumers, the administration added.
The fine was a record and nearly three times the almost US$1 billion levied against Qualcomm Inc in 2015, Bloomberg said.
The size of the penalty was determined after the market watchdog decided to fine Alibaba 4 percent of its 2019 sales of 455.7 billion yuan.
Shortly after the decision was announced, Alibaba issued a contrite statement that used many of the government’s recent talking points on the issue, pledging to make changes to safeguard fair competition.
“We accept the penalty with sincerity and will ensure our compliance with determination,” it said.
The company added that it would hold a conference call with investors tomorrow to share its “thoughts and plans for the long-term healthy development of our business in the future.”
“We are committed to ensuring an operating environment for our merchants and partners that is more open, more equitable, more efficient and more inclusive in sharing the fruits of growth,” it said.
E-commerce giants Alibaba and JD.com (京東), along with messaging and gaming colossus Tencent Holdings Ltd (騰訊), became hugely profitable on the back of growing Chinese digital lifestyles and government restrictions on major US competitors in the domestic market.
However, as the platforms amassed hundreds of millions of regular users, concern has risen over their influence in China, where tech-savvy consumers use them to communicate, shop, pay bills, book taxis, take out loans and perform a range of other daily tasks.
Alibaba has faced special scrutiny after Ma publicly criticized Chinese regulators in October last year as being stuck in the past after they expressed growing concern over the push into online lending, wealth management and insurance products by Alibaba’s online-payments arm, Ant Group (螞蟻集團).
The Chinese government has in the past few years sought to rein in runaway personal debt and chaotic lending, and upstart Ant’s growing profile — and Ma’s rare public criticism — have been widely viewed as a challenge to vested interests in the country’s state-dominated financial sphere.
Even before yesterday’s announcement, the crackdown had already cost Alibaba and Ma dearly.
A planned record-shattering US$35 billion initial public offering in Hong Kong and Shanghai by Ant Group, which would have added to Ma’s already massive wealth, was abruptly shelved.
Ma subsequently disappeared from public view for weeks, and Ant Group was ordered by regulators to return to its roots as an online payment services provider.
Shares of major tech players have suffered amid fears of further fines and restrictions.
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