Jack Ma’s e-commerce giant, Alibaba Group has accepted a US$2.8 billion dollar fine in China and committed to strengthening its compliance systems after the Chinese competition regulator imposed the fine on the company for abusing its dominant market position.
The penalty is 4 per cent of the company’s total domestic revenue in 2019 and sends a clear signal that Chinese authorities are committed to rooting out what they see as monopolistic practices by tech giants.
In a translated statement, the State Administration of Market Regulation (SAMR) explained that Alibaba restricted competition in the online retail market in China, which “affected innovation and development of the platform economy, and infringed on the business of several merchants”.
The company was put under administrative guidance, requiring it to implement a comprehensive rectification programme; strengthen internal controls and compliance; uphold fair competition; and protect the rights and interests of merchants and consumers.
It must also submit a self-assessment and compliance report for three years.
According to the regulator, Alibaba waved its right to appeal and accepted the fine, stating it would ensure compliance.
The company said in their response to the regulator the penalty “served to alert and catalyze companies like ours” and was an “important action to safeguard fair market competition and quality development of internet platform economies”.
SAMR commenced its probe in December 2020, a month after regulators suspended a planned dual listing by its financial arm Ant Group on the Shanghai and Hong Kong exchanges.
The agency held talks with Tencent founder and CEO Pony Ma last month to discuss compliance issues, prompting speculation it would be targeted for closer scrutiny.
In another move to curb anti-competitive behaviour, the country’s central bank asked for comments on proposed regulations to tighten oversight of payment services offered by non-bank companies including Alibaba and Tencent.