Alibaba hit with record billion-dollar fine by Chinese authorities

(Image credit: Alibaba)

Chinese regulators have penalized e-commerce giant Alibaba with a record 18.23 billion yuan ($2.8 billion) fine for violating anti-monopoly laws. 

The fine, equal to around 4% of Alibaba’s domestic revenue in 2019, is reportedly the largest anti-monopoly fine ever rolled out by Chinese authorities. It was imposed after an investigation revealed an “exclusive dealing agreement” that was found to violate monopoly laws in the country. 

According to China’s State Administration for Market Regulation, Alibaba has abused its dominant market position since 2015 by prohibiting merchants on its platform from opening stores or participating in promotional activities on other competitive platforms.

The investigation, which began in December, also said that Alibaba used market forces, platform rules, data, algorithms and other technical means to implement the “exclusive dealing agreement”.

Chain of events

The anti-monopoly probe was preceded by the suspension of the planned IPO of Alibaba’s financial technology affiliate, Ant Group, in early November. 

According to some observers, the cancellation of the IPO was an indication of the troubles ahead of the company, following the criticism of Chinese regulators in October by Alibaba’s co-founder Jack Ma, who accused them of stifling innovation. 

Alibaba has reportedly accepted the fine and vows to introduce measures to lower entry barriers and business costs faced by merchants on its e-commerce platforms. 

"We're happy to get the matter behind us, but the tendency is that regulators will be keen to look at some of the areas where you might have unfair competition," said Alibaba Group's executive vice chairman Joe Tsai during an investor call, adding however that the company wasn’t aware of any other on-going anti-monopoly investigation.

Via: BBC

Mayank Sharma

With almost two decades of writing and reporting on Linux, Mayank Sharma would like everyone to think he’s TechRadar Pro’s expert on the topic. Of course, he’s just as interested in other computing topics, particularly cybersecurity, cloud, containers, and coding.