AUS
NZ
UK
CA
USA
IND
Source: Andrii Yalanskyi, Shutterstock
Summary
- The Chinese tech behemoth owned by one of the most successful entrepreneurs Jack Ma has been fined $2.75 billion for abusing its dominant market position
- The latest fine amounts to 4 per cent of the company’s domestic revenues of 2019
Chinese tech behemoth Alibaba has been fined a record $2.75 billion, equivalent to £2 billion for abusing its dominant market position for several years. The fine is almost three times the previous biggest fine imposed on any company in China. In 2015, Qualcomm, biggest global supplier of mobile phone chips had to pay $975 million on charges of practicing anticompetitive policies.
Chinese regulator State Administration for Market Regulation (SAMR) in its ruling said that the online retail conglomerate constrained competition by preventing some sellers from using rival’s e-commerce platforms since 2015.
Alibaba, which is listed in New York and Hong Kong stock exchanges, has accepted the ruling, and said that the company would ensure that the ruling is fulfilled, and it would also work to improve corporate compliance.
Also Read: Alibaba (NYSE:BABA) Stocks Surge As Jack Ma Resurfaces After 3 Months
The latest fine, which amounts to 4 per cent of the company’s domestic revenues of 2019, is also being seen as the closure to the anti-monopoly case against the company for now by many. The company however will be holding a conference call on Monday to discuss the fine imposed on it.
The backdrop
Alibaba is owned by one of the most successful entrepreneurs Jack Ma, who co-founded the group in 1999, which gradually become one of the most successful e-commerce companies in the world and was being compared with the e-commerce giant Amazon.
The company has been facing unprecedented regulatory crackdown within the country since Ma publicly criticised the country’s regulatory system in October 2020 and asked for reforms, which put the home-grown technology conglomerates in the eyes of the government and the company was put under intense scrutiny by many regulatory agencies.
The company’s planned $37-billion stock market float by internet finance arm Ant Group, touted to be the largest ever initial public offering, was halted by the regulatory authorities. Later towards the end of the year, the SAMR announced it launched an antitrust inquiry into the company.
Others under fire
Though the actions against Alibaba were largely being linked with Ma’s sharp criticism of China’s regulatory system but other tech giants in the country are also facing increasing pressure from regulators who are concerned about their growing influence. In the last one year, tech companies like Tencent, Baidu, SoftBank, Didi Chuxing etc., have been fined over deals that violated anti-monopoly rules.
Alibaba though has been accused by rivals and sellers for purportedly barring its sellers from getting listed on other e-commerce platforms. Shi Jianzhong, a member of the antitrust consultant committee, has reportedly termed the fine as a big milestone.
