China just slapped a record antitrust fine on one of the world’s largest retailer and eCommerce companies, Alibaba Group Holding, on account of market abuse.
Following this shocking move the company thanked the government, accepted the fine and said that they were happy to put the matter behind them bringing relief to its investors.
Increase in fortune
Meanwhile, Alibaba’s American depositary receipts climbed 9.3 percent on 12th April in New York, their biggest jump in almost four years. For Jack Ma, the founder of the eCommerce giant, it meant his fortune increased by $2.3 billion to $52.1 billion, according to the Bloomberg Billionaires Index.
The $2.8 billion fine is less severe than some investors feared and is based on only 4 percent of the company’s 2019 domestic sales, far less than the maximum 10 percent allowed under Chinese law. While the internet giant will have to adjust the way it does business, its vice chairman said regulators won’t impose a massive overhaul of its eCommerce strategy and its chief executive officer declared Alibaba ready to move on.
“Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development. For this, we are full of gratitude and respect,” the company said in an open letter.
Mr. Ma, who up until last year was China’s richest person, has lost billions since his nation’s regulators began an anti-monopolistic campaign, halting the initial public offering (IPO) of his Ant Group payments company just two days before it was scheduled to go public. He is now China’s third-richest person after Zhong Shanshan of bottled-water company Nongfu Spring and Tencent Holdings’ Pony Ma.
Separately, China’s central bank ordered Ant to become a financial-holding company that will be regulated more like a bank. Announced recently, the move will have far-reaching implications for the firm’s growth and its ability to press ahead with an IPO.