On Saturday, Chinese regulators fined Alibaba Group, the world’s largest e-commerce firm, 18.3 billion yuan ($2.8 billion) for anti-competitive tactics, as the ruling Communist Party tightens its grip on fast-growing tech industries.
Party leaders are concerned about Alibaba’s and China’s other large internet companies’ dominance at a time when the sector is expanding into banking, health care, and other sensitive areas. This year, the party says it will focus on anti-trust compliance, especially in the tech sector.
The State Administration for Market Regulation reported that Alibaba had been fined for “abusing its dominant position” to restrict competition among retailers who use its platforms and to obstruct the “free circulation” of products. The fine amounted to 4% of the company’s overall 2019 revenue of 455.712 billion yuan ($69.5 billion), according to the company.
Following regulators’ decision in November to postpone the stock market debut of Ant Group, an e-commerce giant’s finance platform, Alibaba, and its billionaire founder, Jack Ma, have suffered another setback. Last year, it would have been the world’s largest IPO.
After criticising regulators in a November address, Ma, one of China’s wealthiest and most well-known businessmen, vanished from public view for a time. The Ant Group was suspended a few days later, despite regulators’ concerns that Ant lacks appropriate financial risk controls, according to financial experts.
Alibaba is a retailer, a business-to-business platform, and a consumer-to-consumer platform that was established in 1999. It has exploded into financial services, film making, and other areas at breakneck speed.
In March, a total of twelve companies, including Tencent Holdings, which runs games and the famous WeChat messaging app, were fined a total of 500,000 dollars ($77,000) for failing to report prior acquisitions and other deals.
The government released anti-monopoly guidelines in February, aimed at stopping anti-competitive activities including negotiating exclusive deals with retailers and using subsidies to suffocate rivals.
In December, regulators said they were looking into Alibaba’s anti-competitive practises, including a scheme known as “choose one of two,” which allows business partners to avoid doing business with its rivals.
In December, regulators summoned executives from Alibaba, JD.com, and four other internet firms to a conference, warning them not to use their market supremacy to keep out potential rivals.