Chinese Tech Giant Alibaba Faces Record Fine
The Chinese State Administration for Market Regulation filed an anti-monopoly case against the tech giant Alibaba Group for a record fine of $2.75 billion on April 10, reports Xinhua Net, the state newspaper. Regulators in China determined that Alibaba abused its dominant market position for several years.
The investigation reported that Alibaba had forced merchants and businesses into “either-or” situations, prohibiting those choosing to register on its platforms from opening stores or participating in sales events on any other platforms. The company allegedly used its market capacity, platform requirements, data and algorithms, and other technological means to gain an unfair advantage.
The fine is equivalent to 4 percent of Alibaba's sales in China in 2019, Xinhua reported, and it dwarfs the previous record penalty of $975 million handed out to American chipmaker Qualcomm in 2015.
Alibaba immediately issued a statement in response to express its acceptance of the ruling and the attitude to ensure full compliance.
Co-founded by legendary entrepreneur Jack Ma, Alibaba is one of China's most prominent and successful private businesses. Alibaba is China’s—and by some measures, the world’s—biggest online commerce company. Its three main sites—Taobao, Tmall, and Alibaba.com—have hundreds of millions of users and host millions of merchants and businesses. Alibaba handles more business than any other e-commerce company. As early as 2013, transactions on its online sites totaled $248 billion last year, more than those of eBay and Amazon.com combined. In addition to e-commerce, Alibaba also has a financial affiliate, Ant Group, which is China’s biggest payments provider, with more than 730 million monthly users on its digital payments service Alipay.
A comparison of market capitalization with the biggest tech firms would also provide helpful context for the value and size of Alibaba. The data from S&P Capital shows that the value of Alibaba is ranked fourth in the world, above Facebook ($204 bn), IBM ($191 bn), Oracle ($172 bn), and Samsung Electronics ($170 bn); with Apple being the most valuable ($615 bn), followed by Google ($397 bn) and Microsoft ($384 bn).
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. Ma has kept a very low profile since Ant Group, Alibaba's financial affiliate, was forced to shelve what would have been the world's biggest IPO last November after he criticized Chinese regulators. Ma raised the ire of Chinese government officials at a financial technology conference for likening China’s state-dominated banking sector to “pawnshops” and lamenting their lack of innovation.
While some saw the government’s crackdown on Ma’s business empire as a vengeful communist party lashing out at the outspoken businessman, others claim that the reality is that the government has been actively grappling with new technologies for possible implications on the stability of China’s market environment and financial system. Last month, 12 companies were fined over deals that violated anti-monopoly rules, including some of the largest companies in China such as Tencent, Baidu, Didi Chuxing, SoftBank, and a ByteDance-backed firm.