Alibaba Group has been fined a record 18.2 billion RMB ($2.8 billion) by antitrust regulators for breaching competition laws. The fine was announced on April 10 and amounts to 4% of the company’s domestic annual revenue in 2019. This is considerably higher than predictions earlier this year which estimated the fee to be at least $975 million.
China’s increasing tech regulation
Since the second half of 2020, financial regulators have compiled a series of new practices to create a more open and fair tech and e-commerce market. According to the new regulations, antitrust fines can be up to 10% of a company’s annual revenue. Fines of $500,000 have been levied on twelve other internet companies, including Tencent, Baidu, SoftBank, and ride-sharing giant Didi, for unfair competition.
Alibaba has been penalised for abusing its marketing position and developing monopolistic practices through its ‘choose one of two’ requirement for merchants. The policy forbade retailers from selling on other e-commerce platforms, a practice that is now banned under the new laws. It has been criticised by regulators and merchants alike for restricting competition and having a negative impact on innovation within China’s e-commerce sphere. Following a series of regulatory discussions involving the company’s senior executives, Alibaba must submit a ‘self-examination compliance report’ to the State Administration for Market Regulation for three consecutive years.
Ant Group faces company restructure
The fate of Alibaba’s fintech affiliate, Ant Group, which saw its record-breaking $34 billion IPO suspended last year, was also revealed. Earlier today, The People’s Bank of China announced that Ant Group will restructure as a financial holding company. China’s central bank stated that the fintech company had developed a “comprehensive and feasible restructuring plan” which would end the integrated connection between Alipay, and loan services Jiebei and Huabei.
Falling number of tech IPOs in China
Many analysts have suggested that this move will significantly cut the value of Ant Group and continue to delay its IPO for the foreseeable future. Facing increased scrutiny from regulators, a record number of tech companies have chosen not to list on Shanghai’s Star market this year. March reached a high point with 76 companies choosing to abandon their IPO in China.
The news received considerable attention online and ‘Alibaba Group has been fined 18.2 billion RMB’ (#阿里巴巴集团被罚182.28亿元#) gained 790 million views on Weibo. Netizens commented that Tencent, JD and Meituan should face the same close scrutiny as Alibaba and be fined more.