China beats Alibaba with a $ 2.8 billion fine on monopoly
The front of Alibaba’s Wangjing office in Beijing on December 24, 2020.
Costfoto | Barcroft Media | Getty Images
Chinese regulators fined Alibaba 18.23 billion yuan ($ 2.8 billion) in the tech giant’s antimonopoly investigation, claiming it abused its dominance.
Regulators launched an investigation into the company’s monopoly practices in December. The main focus of the research was on a practice that forces traders to choose one of two platforms rather than being able to work with both.
In a statement on Saturday, the Chinese State Administration for Market Regulation (SAMR) said the policy suppressed competition in China’s online retail market and “harmed retailers’ businesses on the platforms and the legitimate rights and interests of consumers, according to a CNBC translation.” a Chinese-language statement.
The government said “choose one” policies and others allowed Alibaba to strengthen its position in the market and gain unfair competitive advantage.
In addition to the fine, which is roughly 4% of the company’s 2019 sales, regulators are required to file Alibaba self-assessment and compliance reports with the SAMR for three years.
The company said in a statement that it had accepted the penalty and would comply with the SAMR’s decision. Alibaba said it had fully cooperated with the investigation, conducted a self-assessment and already made improvements to its internal systems.
“Alibaba would not have achieved our growth without solid government regulation and service, and the critical scrutiny, tolerance and support of all of our constituencies have been vital to our development,” the company said.
The company added it would hold a conference call at 8 a.m. Hong Kong time on Monday to discuss the fine.
The announcement is the latest in China’s crackdown on its technology companies. Regulators are increasingly concerned about the power of China’s tech giants, especially those in the financial sector.
Much of this heightened scrutiny has tightened around the business empire of billionaire Jack Ma, who founded both Alibaba and Ant Group.
Ant’s much-anticipated IPO was abruptly suspended in November, shortly after Chinese regulators released new draft rules on online microcredit, an integral part of the company’s business. The China Securities Regulatory Commission also cited Ma and other Ant executives ahead of the announcement.
Ma appeared to have come under fire for criticizing China’s financial regulators. The country’s financial system is “the legacy of the industrial age”.
After the Ant went public, Ma fell out of the spotlight and fueled speculation about his whereabouts. In January, the eccentric billionaire reappeared briefly in a video as part of an initiative by his charity foundation.
Ant has since committed to listing, saying it would help employees monetize stocks.
– CNBC’s Arjun Kharpal, Evelyn Cheng and Eunice Yoon contributed to this report.