Chinese antitrust regulators are considering giving a record fine to Alibaba Group for anti-competitive behaviour, according to The Wall Street Journal. The alleged fine, which has been denied by Beijing, comes as authorities seek to clamp down on the behaviour of China’s tech giants. The fine is said to be more than $975 million, which is the value of the largest fine in China’s corporate history. It was levied on semiconductor company Qualcomm for defying competitive practices in 2015. Regulators are also said to be deciding whether Alibaba should sell off some of its assets unrelated to its online retail business.
Since the second half of 2020, financial regulators have compiled a series of new regulatory practices to create a more open and fair market among China’s tech and e-commerce giants. Fines of $500,000 have been levied on twelve other internet companies, including Tencent, Baidu, SoftBank, and ride-sharing giant Didi, for unfair competition. However, their fines are swamped by the alleged figure facing Alibaba.
Alibaba has been under considerable scrutiny following the suspension of the IPO of its fintech affiliate, Ant Group, in November. The decision came shortly after Alibaba founder Jack Ma criticised China’s state-owned banks for neglecting smaller companies and individuals in what he described as their “pawnshop mentality”, and subsequent meetings with authorities in Beijing. Ma has been lying low since the suspension but has still been travelling across China according to reports by the FT.
Ant Group, the world’s highest-valued fintech company, has been targeted by financial regulators due to its provision of cheap loans. The company is working with regulators in the hope that its IPO will take place later this year.
The fine will have little impact on Alibaba’s billion-dollar business, which brought in a revenue of 221.08 billion RMB ($34.2 billion) in Q3 2020. Indeed, as one of China’s biggest companies and domestic success stories, it is unlikely that authorities want to damage the prospects of Alibaba, but rather limit its monopoly power. Competitors and merchants have criticised Alibaba’s ‘choose one of two’ policy which forbids merchants from selling on other e-commerce platforms, a practice that is now banned under the new laws.