Chinese regulators fine Alibaba record $2.8bn

Chinese regulators have fined Alibaba a record Rmb18.2bn ($2.8bn) after finding that the ecommerce group had abused its market dominance.

The fine, which was set at 4 per cent of Alibaba’s 2019 revenues, concludes an antitrust investigation into the company founded by Jack Ma. It comes as Chinese authorities have stepped up scrutiny on dealmaking and anti-competitive practices in its once lightly regulated technology sector.

The market regulator said that since 2015 Alibaba had forced merchants to sell exclusively on its Tmall and Taobao online shopping platforms.

Alibaba used its “market position, platform rules and data, and algorithmic methods” to put in place rewards and punishments for its “choose one of two” policy, the regulator said.

In November, Chinese authorities suspended the $37bn initial public offering of Ma’s Ant Group, Alibaba’s payments and lending sister company, at the last minute.

Previously, the country’s competition regulators had mostly focused on traditional industries at home and on foreign companies. It imposed a then-record fine of $975m in 2015 on US chip-design group Qualcomm

But last November, regulators started drawing up the first antitrust measures to cover the online platforms that have become China’s most valuable companies.

The State Administration of Market Regulation ordered Alibaba to “carry out a comprehensive rectification” drive on its platform, to strengthen its legal controls and compliance.

In response to the penalty, Alibaba said it “sincerely accepted [it]”.

In a post on its official Weibo microblogging account, Alibaba said: “We will strengthen our business operations in line with the law, further improve the setting-up of our compliance systems . . . and better fulfil our social responsibilities.”

The Communist party People’s Daily newspaper said the punishment “reflects the basic requirements of governing the country according to law, and was well-founded and reasonable”.

A Chinese antitrust lawyer, who asked to remain anonymous, said the fine “was meant to teach Alibaba ‘don’t think you can do whatever you want’, but [would] not materially harm the business”.

He noted the penalty was not as large as it could have been and limited to Alibaba’s ecommerce operations, rather than its other industry-wide operations.

Alibaba has in recent years bought up everything from supermarket chains to home furnishing retailers, giving it a share of about one-fifth of China’s total retail sales. 

Jobber Wiki author Frank Long added to this report.