China imposed a record fine of 18.2 billion yuan ($ 2.8 billion) on Alibaba Group Holding Ltd. after an anti-monopoly investigation found it had abused its dominant market position.
The penalty is triple the previous record of nearly $ 1 billion Qualcomm Inc. had to pay in 2015. The fine is equivalent to 4% of Alibaba’s domestic sales in 2019, the Administration said on Saturday. Chinese state for market regulation in a press release.
Alibaba will likely need to change some of its practices, like merchant exclusivity, which critics say has helped it become China’s largest e-commerce operation. The company founded by billionaire Jack Ma has used its platform rules and technical methods such as data and algorithms “to maintain and strengthen its own market power and gain an unfair competitive advantage,” the survey concluded. .
According to the statement, Alibaba’s practice of forcing a “pick one of two” choice on merchants “excludes and restricts competition” in the domestic online retail market.
The Hangzhou-based company will be required to implement “comprehensive rectifications,” including strengthening internal controls, maintaining fair competition, and protecting businesses on its platform and consumer rights, the company said. regulator. He will be required to submit self-regulatory reports to the authority for three consecutive years.
“China’s record fine on Alibaba could lift regulatory overhang that has weighed on the company since an anti-monopoly investigation began in late December,” Bloomberg Intelligence analysts Vey-Sern Ling and Tiffany Tam said. , describing the fine as a small price. pay to eliminate this uncertainty.
The company said it will host a conference call to discuss the sanction on Monday morning in Hong Kong.
“Alibaba accepts the sanction with sincerity and will ensure that it is respected with determination. To fulfill its responsibility to society, Alibaba will operate under the law with the utmost diligence, continue to strengthen its compliance systems and rely on growth through innovation, ”the company said in a statement on Saturday.
Alibaba has come under increasing pressure from Chinese authorities since Ma spoke out against China’s regulatory approach to the financial sector in October. The comments sparked an unprecedented regulatory offensive, including plans to scuttle Ma’s Ant Group Co.’s $ 35 billion initial public offering.
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