Home Business Alibaba under Scrutiny as China imposed $2.75 Billion Fine

Alibaba under Scrutiny as China imposed $2.75 Billion Fine

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Following the footsteps of West, China has switched its  long laissez-faire approach to more antitrust enforcement on their internet platforms. And the target in none other than Alibaba; the fine of $2.75 billion, about 4% of company’s 2019 domestic revenue is the result of violation of anti-monopoly law. According to Chinese authorities the e-commerce platform has been found abusing its dominant position in market for several years.

Alibaba Group Holding Ltd. has been under the heat since Jack Ma’s, world’s richest entrepreneur public criticism at China’s regulatory system. Just after a month of his statement, State Administration for Market Regulation (SAMR) imposed antitrust probe in Ant Group, which is supposed to be the world’s’ biggest internet finance arm of Alibaba, but sadly seemed to be doomed in current atmosphere.

“This penalty will be viewed as a closure to the anti-monopoly case for now by the market. It’s indeed the highest profile anti-monopoly case in China,” said Hong Hao, head of research BOCOM International in Hong Kong.

Alongside the highest ever fine in antitrust penalties globally, Alibaba is also expected to go through “thorough rectification” which means they need to revised their overall business strategy and compliance. SAMR has also identified that, since 2015, Alibaba has been “abusing market dominance” by forbidding its sellers to sell on other ecommerce platforms, inhibiting the free movement of goods and violating the rights of merchants.

On other hand, Alibaba accepts full responsibility for the accusation and ensure top to bottom internal scrutiny. “We will tackle it openly and work through it together,” CEO Daniel Zhang said in a memo to staff seen by Reuters. “Let’s improve ourselves and start again together as one.”

Although, for a company like Alibaba the fine is quite affordable and a smooth way to win over antitrust battle in China. However the hefty nature of the fine and authorities raising trust issues is generating uncertainty and confusion for Asian based tech companies.

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