China has hit Alibaba, one of the country’s biggest online retailers, with a record $2.8 billion (18.2 billion yuan) fine, after an investigation found the e-commerce giant violated China’s anti-monopoly law.
The Chinese government launched an investigation into Alibaba in December to determine whether the company was preventing merchants from selling their products on other platforms, weeks after the authorities called off the initial public offering of Ant Group, the financial affiliate of Alibaba.
China’s market regulator found that Alibaba’s practices had a negative effect on online retail competition and innovation. Alibaba used data and algorithms to strengthen its own position in the marketplace, resulting in an “improper competitive advantage,” China’s State Administration for Market Regulation said in a statement. The company will have to reduce its anti-competitive tactics and provide compliance reports to the government for the next three years.
Beijing has been tightening the screws on China’s national tech champions in recent months, part of a regulatory crackdown that President Xi Jinping has described as one of the country’s top priorities for 2021. Last month, Xi urged officials to step up their efforts to regulate online companies to maintain social stability.
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.
Alibaba has since received the fine and vowed to change.
The company said it would introduce measures to lower entry barriers and business costs faced by merchants on 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.”
“With this penalty decision we’ve received good guidance on some of the specific issues under the anti-monopoly law,” Alibaba Group’s executive vice chairman Joe Tsai said as BBC reports
