China fines Alibaba record $ 2.8 billion after exclusive investigation

Jack Ma (Image: Chess Knot / Getty Images)

  • China fined Alibaba Group a record $ 2.8 billion after investigations revealed abuse of market dominance.
  • The survey is part of a campaign to curb the power of Chinese internet leaders and billionaire founders.
  • Alibaba has been under increasing pressure from authorities since its founder Jack Ma spoke in October against a regulatory approach to China’s financial sector.

China fines a record $ 2.8 billion at Alibaba Group Holding after an antitrust investigation reveals that Beijing is abusing its market advantage as it cracks down on Internet giants I imposed it.

According to China’s antitrust oversight agency, the penalty of 18.2 billion yuan is three times the record high of about $ 1 billion that U.S. chip maker Qualcomm had to pay in 2015, and Alibaba’s 2019 It was based on 4% of the year’s domestic revenue. The company also needs to initiate a “comprehensive remedy,” from protecting merchants and customers to strengthening internal controls, the agency said in a statement on Saturday.

Fines (about 12% of Alibaba’s 2020 net income) help eliminate some of the uncertainty that rests on China’s second-largest company. However, Beijing remains keen to curb the Internet and fintech giants, as well as the empire of billionaire founder Jack Ma, including Ant Group Co.’s consumer finance business and Alibaba’s extensive media holdings. It is said that we are scrutinizing the part of.

Alibaba uses platform rules and technical methods such as data and algorithms to “maintain and strengthen its own market power and gain an inappropriate competitive advantage,” the State Market Regulatory Authority concludes in a study. I attached it. The company will need to change many practices, critics say, that helped it become China’s largest e-commerce business, including merchant monopolies.

“High fines have brought regulators to the media’s attention and sent a strong signal to the tech sector that such types of exclusive acts are no longer acceptable,” said China, author of “China’s Antitrust Exceptionalism.” Angela Chang, director of the center, said. University of Hong Kong law. “It’s a stone that kills two birds.”

According to a statement, Alibaba’s practice of imposing a “choose one from two” choice on merchants “shuts out and limits competition” in the domestic online retail market.

Government actions warn the tech sector as the government is scrutinizing the impact of companies such as Alibaba and social media giant Tencent Holdings on areas from consumer data to mergers and acquisitions. will send.

The Alibaba survey was one of the first salvos of a campaign that appeared to be designed to curb the power of Chinese internet leaders and their billionaire founders. The company has been under increasing pressure from authorities since Ma announced in October that it opposed a regulatory approach to China’s financial sector. These comments caused unprecedented regulatory breaches, including abandoning Ant Group Co.’s $ 35 billion initial public offering.

Alibaba said it would hold a conference call on Monday morning in Hong Kong time to address protracted questions about antitrust watchers’ orders.

Bloomberg Intelligence analysts Bay Sarn Lin and Tiffany Tam said, “China’s record fines against Alibaba have weighed heavily on Alibaba since the start of its antitrust investigation in late December. There is a possibility of eliminating the overhang. ” Paying to eliminate that uncertainty. “

Further action

Still, it remains unclear whether Watchdog or other agencies may demand further action. Regulators, for example, are concerned about Alibaba’s ability to shake public discourse and want to sell some of its media assets, including Hong Kong’s leading English newspaper, South China Morning Post. It is said.

According to regulators, Hangzhou-based businesses need to implement “comprehensive corrective actions” such as strengthening internal controls, maintaining fair competition, and protecting companies regarding platforms and consumer rights. A self-regulatory report must be submitted to the authorities for the third consecutive year.

“Alibaba accepts penalties in good faith and ensures compliance with our determination. To fulfill our responsibilities to society, Alibaba will continue to operate in accordance with the law with the utmost care, continue to strengthen our compliance system and innovate. We will build growth through, “the company said. Said in a statement on Saturday.

Challenges faced

CEO Daniel Zhang said in a memo to employees on Saturday that Alibaba was always remorseful and adapted when faced with challenges. He called for unity among staff, saying the company should “adjust and start over.”

The Communist Party-run People’s Daily said in a Saturday commentary that the punishment included certain antitrust measures taken by regulators to “prevent chaotic expansion of capital.”

“It does not mean denying the important role of the platform economy in the development of the economy as a whole, nor does it indicate a change in attitude from the perspective of state support for the platform economy,” the newspaper said. “Regulation is for better development, and’raining’ is also a kind of love.”

China fines Alibaba record $ 2.8 billion after exclusive investigation

Source link China fines Alibaba record $ 2.8 billion after exclusive investigation

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