Chinese multinational company Alibaba Group has been fined $2.78 billion by the country’s regulators for anti-competitive tactics, as the ruling Communist Party tightens its grip on the fast-growing technology industries.
Party leaders are concerned about Alibaba’s supremacy, which comes at a time when the internet industry is expanding into banking, health care, and other sensitive areas. This year, the party says it will focus on antitrust compliance, especially in the tech industry.
The State Administration for Market Regulation announced that Alibaba was fined for ‘abusing its dominant position” to restrict competition among retailers who use its platforms and obstructing the ‘free circulation” of products. It said that the fine was equivalent to 4 percent of its total 2019 revenue of $69.5 billion.
Following the regulators’ decision in November to postpone the stock market debut of Ant Group, a finance platform spun off from the eCommerce giant, this move is another setback for Alibaba and its billionaire founder, Mr. Jack Ma. If gone through, the Ant Group’s IPO would have been the world’s largest initial public offering.
Mr. Ma, one of China’s richest and most well-known businessmen, vanished from public view after criticizing regulators in a speech. The Ant Group was suspended a few days later, as regulators cited concerns about the firm’s lack of appropriate financial risk controls, according to finance experts.
Established in 1999, Alibaba is a company that operates retail, business-to-business, and consumer-to-consumer platforms. It has rapidly spread into financial services, film making, and other industries.
In March, Tencent Holdings, which owns games and the famous WeChat messaging app, was fined $77,000 each for failing to report prior acquisitions and other deals.
The government has also released anti-monopoly guidelines, aimed at preventing anti-competitive activities such as exclusive deals with retailers and the use of subsidies to suffocate rivals.
The regulators said that they were looking into Alibaba’s possible anti-competitive practices, including a scheme known as “choose one of two,” which allows business partners to avoid competing with the company’s rivals.
The regulators revealed that executives of Alibaba, its biggest rival, JD.com, and four other internet companies were summoned to a meeting and warning them not to use their market supremacy to keep out potential rivals.