The Chinese regulators accused Alibaba of its monopolistic practices and hit it with a fine of amount 18.23 billion yuan ($2.8 billion). the anti-trust regulators concluded that the online shopping giant had been behaving like a monopoly.
The regulators opened a thorough investigation into the company’s monopolistic practices in December. The investigation’s main focus was a practice that forces merchants to choose one of two platforms, rather than being able to work with both.
China’s State Administration for Market Regulation (SAMR) claimed the giant tech’s policy dominated competition in China’s online retail market and “infringes on the businesses of merchants on the platforms and the legitimate rights and interests of consumers. Moreover, the government added that the “choose one” policy and others gave way to Alibaba to boost its position in the market and also take unfair competitive advantage.
Hence, along with the fine of around 4% of the company’s 2019 revenue, regulators said Alibaba will not only have to file self-examination but also compliance reports to the SAMR for three years.
The company said in a statement it accepted the penalty and will comply with the SAMR’s determination and sincerity. Alibaba said it fully cooperated with the investigation, conducted a self-assessment, and already implemented improvements to its internal systems.
“Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development,” the company said.
Co-founded by legendary entrepreneur Jack Ma, Alibaba is one of China’s most prominent and successful private businesses. By making such a high-profile example, Chinese regulators are sending a clear message about their intent to rein in the country’s most powerful companies.
Ma has kept a very low profile since Ant Group, Alibaba’s financial affiliate, was forced to shelve what would have been the world’s biggest IPO last November after he criticized Chinese regulators. Since then, Ma has made only one brief public appearance in a video in January, and Ant Group — which owns the hugely popular digital payments app Alipay — has been ordered to overhaul its business.