Alibaba is China’s largest e-commerce company. It is mostly B2B meaning buyer to buyer, meaning buyers and sellers around the world can connect and carry out transactions. It has been very popular in China but shockingly it has now been fined for a huge sum of $2.75 Billion or 18 Billion Yuan.
China fined Alibaba Group Holding Ltd on Saturday after an anti-monopoly investigation found that the group had abused its position as the dominant company in the market. According to Hong Hao, head of research BOCOM International in Hong Kong, “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 investigation revealed that Alibaba listed in New York and Hong Kong has been abusing its market dominance since 2015. They have been preventing merchants on their website from using any other platform but their own. This kind of practice violates China’s antimonopoly laws as they hinder the free circulation of goods. It also infringes upon the business interest of all the merchants using their website.
This is not the first time China has hit a company with heavy penalties. Qualcomm was fined for $970million back in 2015 due to antitrust penalties. This fine now is more than double that.
While this may be the largest fine ever for any antitrust penalty, it only amounts to 4% of Alibaba’s domestic revenues for 2019. So I am sure they are able to pay for it. The company said in a statement that they “will ensure its compliance with determination”. The CEO Daniel Zhang also said in a memo that “We will tackle it openly and work through it together. Let’s improve ourselves and start again together as one”.
This fine will serve as a beacon prompting other regulators like the US and Europe to rethink their own antitrust reviews for famous tech companies like Google and Facebook.
