Baba Stock – Record US$2.8B antitrust fine ‘a spur’ for China’s e-commerce, says Alibaba ｜ Apple Daily
Chinese e-commerce giant Alibaba Group Holding has expressed humility over a record penalty of 18.2 billion yuan (US$2.8 billion) to be paid for abusing its market dominance.
State regulators arrived at the sum after concluding that the company founded by Chinese billionaire Jack Ma had broken anti-monopoly rules, in an investigation held amid a broader, unprecedented crackdown on homegrown tech firms.
The amount of penalty is equal to 4% of Alibaba’s domestic revenues in 2019. It is also the highest imposed in China against monopolistic operations, and far surpasses the US$975 million slapped on American chip giant Qualcomm in 2015 over anticompetitive practices.
Alibaba said in an open letter published on its channel on Weibo, China’s microblogging site, that it was “obliged to obey” the ruling and “humbly accepts” the punishment. The company had been collaborative in state regulators’ investigations, and had at the same time studied Chinese President Xi Jinping’s policies and demands about e-commerce platforms, it said.
“The penalty today acts as a wake-up call and a spur to us,” Alibaba said. “It is also a gesture to produce and regulate the industry’s development, defending the country’s fair competitive environment and promoting the high-value economic development of the platform economy.”
Alibaba also said that the announcement of the hefty fine on Saturday marked a remarkable day for the group’s development. “We regard this as a new beginning,” the group said, adding that it was thankful for the state’s monitoring and criticism, and for the tolerance from the society.
Ma’s business empire came under scrutiny after he publicly criticized the state’s regulatory system in October. A highly anticipated US$37 billion initial public offering by Alibaba’s internet financial arm Ant Group was scrapped just a few days before the planned launch in November. The State Administration for Market Regulation began its antitrust investigation into the Alibaba group in December.
Kevin Tsui, an economics associate professor at Clemson University in the United States, felt that the hefty penalty was not surprising and would not hurt Alibaba financially. It was more of a symbolic move, signifying a new wave of scrutiny of big corporations under anti-monopoly laws that would shrink their business opportunities and development as a result, Tsui said.
He noted that Alibaba had cooperated in the investigation to demonstrate its loyalty to the state, but said it would still be possible for regulators to reopen the case in the future.
One possibility, he said, would be relinquishing to the state certain businesses that were deemed inappropriate if run by private companies. Another scenario might be to foist representatives from the party on the management of Alibaba, he added.
China’s increasing focus on tech-driven retail platforms could be related to the substantial sensitive data under their control, Tsui said. “Data is power,” he said, adding that every move in the crackdown or the state’s takeover of financial technology companies were all linked to national security.
Xi’s championing of socialism and his ambition to eradicate poverty through equal distribution of resources and a narrower rich-poor gap could also explain the get-tough approach on the big boys, Tsui suggested. “But he has ignored the fact that a lot of small shop owners have been selling products on Alibaba’s platforms, which has helped eliminate poverty,” he said.
In December, regulators fined Alibaba 500,000 yuan over “undeclared concentration of undertakings” committed during its acquisition of shares of Yintai Commercial. The same penalty was imposed on 12 other technology companies that violated anti-monopoly laws, including Tencent and Baidu.
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