China slaps Alibaba with $2.8b fine on unfair trade

Monday, April 12th, 2021 00:00 | By
Alibaba. Photo/Courtesy

The world’s biggest online retailer - China’s Alibaba - has been hit with a record fine equivalent to $2.75 billion (Sh295.08 billion).Regulators in China said the internet giant had abused its dominant market position for several years.

In a statement the company said it accepted the ruling and would “ensure its compliance”.

Analysts say the fine shows China intends to move against internet platforms that it thinks are too big.

While not well known outside China, inside the country Alibaba is an ever-present behemoth.

The company is China’s Amazon meets eBay. Retail is its main activity but its work has spread to digital payments, credit and cloud computing.

Restricted competition

The fine amounts to four per cent of Alibaba’s revenue in 2019.Regulators say Alibaba restricted competition by stopping some sellers using other platforms.

It is the latest in a chain of events targeting the company that kicked off last October, just after its high-profile co-founder, Jack Ma, told a gathering of China’s leading regulators that they were stifling innovation.

Jack Ma is well-known in China as one of the country’s most successful entrepreneurs.

“This penalty will be viewed as a closure to the anti-monopoly case for now by the market,” Hong Hao, head of research at BOCOM International in Hong Kong, told Reuters news agency.

“It’s indeed the highest profile anti-monopoly case in China. The market has been anticipating some sort of penalty for some time... but people need to pay attention to the measures beyond the anti-monopoly investigation.”

Tech giants

The country’s other tech giants are also coming under increasing pressure from regulators worried about their growing influence.

Last month 12 companies were fined over deals that violated anti-monopoly rules.

The companies included Tencent, Baidu, Didi Chuxing, SoftBank and a ByteDance-backed firm.

China introduced new anti-monopoly rules for its tech giants early February.

The guidelines, which formalise draft laws released in November, come as regulators try to crack down on anti-competitive behaviour.

The rules are aimed at stopping China’s e-commerce giants Alibaba and from abusing their dominant market position.

Specifically, the rules stop e-commerce platforms from forcing vendors to deal exclusively with them. –BBC

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