Alibaba used its “market position, platform rules and data, and algorithmic methods” to put in place rewards and punishments for its “choose one of two” policy, the regulator said on Saturday. The market regulator said that since 2015 Alibaba had forced merchants to sell exclusively on its Tmall and Taobao online shopping platforms.
In November, Chinese authorities suspended the $37bn initial public offering of Ma’s Ant Group, Alibaba’s payments and lending sister company, at the last minute. The State Administration of Market Regulation ordered Alibaba to “carry out a comprehensive rectification” drive on its platform, to strengthen its legal controls and compliance. It gave Alibaba 15 days to submit a report detailing changes to its “illegal behaviour”.
Recommended Alibaba said it “sincerely accepted” the penalty.
But last November, regulators started drawing up the first antitrust measures to cover the online platforms that have become China’s most valuable companies. Previously, the country’s competition regulators had focused mostly on traditional industries at home and on foreign companies. It imposed a then-record fine of $975m in 2015 on US chip-design group Qualcomm, which equalled 8 per cent of its China revenues. By law, China’s antitrust fines can be set as high as 10 per cent.
Alibaba added that it would strengthen compliance, improve its systems and ensure an open and equitable operating environment for its merchants. “It is an important action to safeguard fair market competition and quality development of internet platform economies,” the company said. “It reflects the regulators’ thoughtful and normative expectations.”
“Whereas Alibaba used to have a strong, assertive stance with regulators, now it will be on the back foot,” said Li. The more significant part of the penalty, said Li Chengdong, chief executive of Dolphin Think Tank, was the fact that Alibaba had been found guilty of serious abuses, meaning it would be more likely to yield in future regulatory disputes over tax and counterfeit goods. Analysts said the fine alone would not significantly affect Alibaba’s operations. It had $48bn of cash on its balance sheet at the end of 2020 and earned $24bn in net profit last year.
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