Alibaba Hit with $2.8 Billion Fine by Chinese Regulators in An Anti-Monopoly Probe

21
SHARE
Jack Ma CEO of Alibaba
Jack Ma CEO of Alibaba

Regulators in China have slapped Alibaba (NASDAQ: BABA) group with an 18.23 billion yuan ($2.8 billion) fine in an anti-monopoly investigation. Chinese regulators alleged the tech giant abusing the market dominance. The $2.8 billion accounts for 4% of Alibaba’s 2019 revenue.

In December, Chinese regulators started investigating the practices of Alibaba with merchants. Merchants argued with the regulators regarding being unable to use both platforms. Purposely the tech required users to choose one of the two Alibaba platforms.

State Administration for Market Regulation (SAMR) said in a statement on Saturday Alibaba’s merchants’ policy “infringes on the businesses of merchants on the platforms.” Additionally, the policy “infringes on the legitimate rights and interests of consumers,” according to a CNBC translation of a Chinese-language statement.

Signup for the USA Herald exclusive Newsletter

Chinese regulators’ cold war with Alibaba

Chinese government added the “choose one” policy Alibaba follows enabled the tech giant to override competitors. This provided the opportunity to take an unfair advantage over others in the market. Now, the group’s obligations include sending compliance reports to the SAMR for 3 years.

Alibaba replied in a statement it accepts the fine and will comply with the State Administration for Market Regulation’s new obligations. It added the group is starting to implement improvements to the internal systems.

“Alibaba would not have achieved our growth without sound government regulation and service.  The critical oversight, tolerance, and support from all of our constituencies have been crucial to our development,” the company said.

Alibaba said it will organize a conference call on Monday at 8 a.m. Hong Kong time to discuss the fine.

The fine followed months of the cold war between the CEO of Alibaba and the former richest person in China Jack Ma. The billionaire disappeared for over two months last year after he criticized the Chinese regulators before his new company Ant Group’s initial public filing was suspended in November by the government.

Since the Ant IPO was suspended, company founder, Jack Ma, stopped appearing for two months. However, he reappeared in a January video in one of his charity initiatives. The company’s stock price plunged 2.16% following the news.