Chinese online retail giant Alibaba has been hit with a $2.75bn fine after an anti-monopoly probe found that the e-commerce firm abused its dominant market position for several years.
China’s State Administration for Market Regulation (SAMR) said that Alibaba restricted competition by preventing some sellers from using other platforms and has been “abusing market dominance” since 2015.
Detailing on the firm’s breach, the regulator said that Alibaba’s business practices limited competition, affected innovation, infringed on the rights of merchants and harmed the interests of consumers. It used data and algorithms to strengthen its own position in the marketplace, resulting in an “improper competitive advantage,” SAMR said.
As part of the penalty, regulators have asked Alibaba to make “thorough rectifications” to strengthen internal compliance and submit a “self-examination compliance report” within the next three years. The 18.2bn yuan fine is equivalent to 4% of the company’s domestic annual sales. Under Chinese rules, antitrust fines are capped at 10% of a company’s annual sales.
In response to the fine, the company said, “We accept the penalty with sincerity and will ensure our compliance with determination. To serve our responsibility to society, we will operate in accordance with the law with the utmost diligence, continue to strengthen our compliance systems and build on growth through innovation.
“Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development. For this, we are full of gratitude and respect.”
In a separate letter to its customers and users, Alibaba said it will work to “lower entry barriers and business costs of operating on our platforms” to ensure “an operating environment for our merchants and partners that is more open, more equitable, more efficient and more inclusive.”
The penalty is the latest move in a chain of events involving the company which kicked off last October just after its co-founder Jack Ma publicly criticised China’s leading regulators adding that they were stifling innovation.
This massive fine has caused the country’s other tech giants to come under increasing pressure from regulators who expect an increased investigation.
Earlier in March, the SAMR fined Alibaba, Tencent, lifestyle services group Meituan, e-commerce platform Pinduoduo and ride-hailing service Didi, for “improper pricing behaviour” and violating anti-monopoly rules.
The latest fine on Alibaba surpasses the $975m fine imposed on mobile phone chip supplier Qualcomm in 2015 for anticompetitive practices.
Commenting on the penalty, head of research at BOCOM International in Hong Kong Hong Hao told Reuters, “This penalty will be viewed as a closure to the anti-monopoly case for now by the market.
“It’s indeed the highest profile anti-monopoly case in China. The market has been anticipating some sort of penalty for some time… but people need to pay attention to the measures beyond the anti-monopoly investigation.”
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