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Chinese Antitrust Regulators Slap Record $2.75B Fine On Alibaba

Chinese Antitrust Regulators Slap Record $2.75B Fine On Alibaba
In its latest drive to curb the market power of the largest internet conglomerates of the country, antitrust regulators in China slapped Alibaba with a record fine of 18 billion yuan (about $2.75 billion) on charges of violating anti-monopoly rules.
Sweeping antitrust regulations targeted at China’s internet based economy was proposed by the country’s regulator in November last year. An antitrust investigation into Alibaba was launched by China’s State Administration for Market Regulation in late December a few days after authorities prevent the launch of the initial public offering of Ant Group which is the financial firm affiliated to Alibaba.
Alibaba had been forcing its Chinese merchants to sell exclusively one e-commerce platform instead of letting them choose freely among different services, such as Pinduoduo and since 2015 which amounted to “abusing market dominance” since 2015 as had been determined SAMR, the country’s top market regulator after the probe conducted by it, the regulator said.  There is often pressure on vendors and merchants to choose Alibaba because of the huge user base of the company’s e-commerce platform.
A range of fines for alleged violating anti-competition practices, for example, for failing to clear past acquisitions with regulators, have been slapped on a range of internet giants including Tencent and Alibaba since late 2020 by the Chinese regulator. However the meagre value of these penalties were more or less symbolic at best when they are compared to the financial advantages that these tech companies have reaped by taking advantage of their market domination. The regulator has not yet directed any of the large companies to break up their business conglomerates and users are still forced to choose between a handful of super-apps that effectively do not allow each other on their platforms.
However signals that the intention of the antitrust authorities of China is more serious than before are being felt in recent weeks. For example, this latest fine slapped on Alibaba if equivalent to 4 per cent of the total revenue generated by the company in China in the 2019 calendar year. 
“Today, we received the Administrative Penalty Decision issued by the State Administration for Market Regulation of the People’s Republic of China,” Alibaba said in a statement in response to the penalty. “We accept the penalty with sincerity and will ensure our compliance with determination. To serve our responsibility to society, we will operate in accordance with the law with utmost diligence, continue to strengthen our compliance systems and build on growth through innovation.”
The company will work to “lower entry barriers and business costs of operating on our platforms” to ensure “an operating environment for our merchants and partners that is more open, more equitable, more efficient and more inclusive” Alibaba said in a separate letter to its customers and users.
The actions by the Chinese regulators seem to have had some impact on the internet companies in the country as some of them have started to accept rivals. For example, an application to have its shopping deals app run on WeChat’s mini program platform was filed by Alibaba, confirmed an Alibaba executive recently.

Christopher J. Mitchell

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