Chinese Regulators Issue a $2.8 Billion Fine Against Alibaba for Violating Anti-Monopoly laws

Chinese state media Xinhua News reported that Chinese E-commerce giant Alibaba received an ¥18.2 billion(US$2.8 billion) fine earlier on Saturday.

Xinhua revealed that China’s State Administration for Market Regulation started an investigation against Alibaba in December 2020. The regulator accused the Chinese E-commerce giant of abusing its dominant power in the online shopping market. Chinese authorities began a special investigation team on this case. The special teams completed extensive research, thorough interviews with relevant staff within the company, and utilized big data analysis and in-depth verifications.

The report further accused that Alibaba has engaged in abusive practices starting from 2015 by exclusively requesting businesses to only operate on its e-commerce platform. In addition to prohibiting companies from engaging with other e-commerce platforms, Alibaba also used marketing dominance, platform rules and regulations, and algorithms to punish companies that do not comply with Alibaba’s policies to ensure the company’s market dominance.

Those investigations led the Chinese regulatory authorities to issue an ¥18.2 billion(US$2.8 billion) fine against the Alibaba group, a number calculated from 4% of Alibaba’s 2019 annual sales revenue within China. Alibaba is also required to submit compliance reports to the regulatory authorities for three consecutive years starting from 2021.

Following the decision, the Chinese state media People’s Daily commented that the fine is a strong signal from regulatory authorities to clean the market and ensure fair and orderly competitions.

The fine is one of the latest negative news for the Alibaba Group, and the Chinese E-commerce company has experienced a series of hostile actions from the Chinese government. Earlier on Thursday, Financial Times reported that the Chinese government forced Jack Ma’s elite business academy Hupan University to suspend new student enrolments. The FT report further suggested that Chinese government officials started to see the elite business academy as a group that could jeopardize the Chinese Communist Party’s interests. Although Jack Ma left from his Alibaba leadership role in 2019, government officials still connect Ma’s influence with the E-commerce giant he created more than 20 years ago.

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The punitive actions came after October 2020, when Jack Ma publicly criticized China’s finance sector regulators and state-owned banks. Ma’s comments directly impacted Jack Ma’s payment business unit Ant Group. The financial payment company was scheduled to go public in November with an estimated value of $37 billion.

Furthermore, the Chinese government also pressured Alibaba to divest its shares in China’s leading private media group South China Morning Post, with the concern that the Chinese E-commerce corporation would influence public opinions. Bloomberg reported that SCMP plans to cut 4% of staff in the product, technology, and subscription divisions.