China regulator fines Alibaba $2.8 billion for antitrust violations - Android

A record penalty on Alibaba highlights Beijing’s continued efforts to curbs on anti-competitive practices by China’s largest tech firms.

China’s top antitrust regulator has issued a RMB 18.2 billion ($2.8 billion) fine on e-commerce giant Alibaba for antitrust practices including “forced exclusivity.” The fine is the largest antitrust penalty ever issued in China.

Why it matters: The record penalty on Alibaba, a bellwether of China’s tech sector, highlights Beijing’s continued efforts to curb anti-competitive practices at major tech firms.

• The business empire of Jack Ma, the once high-profile billionaire behind Alibaba and financial affiliate Ant Group, has been under heavy scrutiny since Ant’s highly anticipated initial public offering was suspended in November last year.

Details: The State Administration for Market Regulation (SAMR), China’s top market watchdog, said in a Saturday statement (in Chinese) that it has issued a RMB 18.2 million fine on Alibaba, nearly four months after launching an investigation in December last year.

• Regulators said the investigation’s main focus was “forced exclusivity”, a practice in which platforms force merchants to use only one company’s platform or services.
• The penalty is equivalent to 4% of the group’s revenue generated in the calendar year of 2019 in China.
• Under article 47 of China’s Anti-monopoly Law, companies can be fined between 1% to 10% of annual sales for monopolistic practices.
• The regulator also ordered Alibaba to revamp its operations and file self-examination compliance reports to SAMR for three years.
• Alibaba says in a Saturday response that it has “accept the penalty with sincerity and will ensure our compliance with determination.”
• The company added that will hold a public conference call on Monday to discuss the decision.

Context: Alibaba has been in a years-long public spat over the subject of “forced exclusivity” with rivals including Pinduoduo, JD, and Meituan. These companies say Alibaba has used its size to force merchants off their platforms.

• The investigation result comes shortly after Alibaba was overtaken by Pinduoduo as the largest e-commerce platform in China by number of users. Pinduoduo describes itself as a major victim of Alibaba’s forced exclusivity practices.
• Alibaba is not alone. Internet giants including Tencent, Didi, and Baidu have recently been hit with antitrust fines, most for failing to report M&A deals to regulators.

READ MORE: INSIGHTS | Antitrust push in China tech