China fines Alibaba $2.8 billion for monopoly behavior

Chinese state media reported on Saturday that the State Administration for Market Regulation imposed the sanction following an antitrust probe into from Alibaba (BABA) “exclusivity agreements” that prevented merchants from selling products on competing e-commerce platforms – a practice known as “pick one out of two”.
The fine is equivalent to 4% of Alibaba’s sales in China in 2019, the official Xinhua news agency reported, and eclipses the previous one. record $975 million penalty handed over to the American chipmaker Qualcomm (COMQ) in 2015.
Beijing has tightened the screws on China’s national tech champions in recent months, part of a regulatory crackdown that President Xi Jinping described as one of the country’s top priorities for 2021. Last month, Xi urged officials to step up their efforts to regulate online businesses in order to maintain social stability.
Co-founded by legendary entrepreneur Jack Ma, Alibaba is one of China’s largest and most successful private companies. By making such a high-profile example, Chinese regulators are sending a clear message that they intend to rein in the country’s most powerful companies.
Ma has kept a very low profile since Ant Group, the financial subsidiary of Alibaba, was forced to put on hold what would have been the biggest ipo in the world last November after criticizing Chinese regulators. Since then, Ma has only made a brief public appearance in a video in Januaryand Ant Group – which owns hugely popular digital payment app Alipay – has been ordered to restructure its business.
In a open letter published on SaturdayAlibaba said the company cooperated with the investigation and accepted the sanction “sincerely and will ensure that we abide by our determination.”

“Alibaba would not have achieved our growth without strong government regulation and service, and the critical oversight, tolerance and support from all our constituencies have been crucial to our development. For this, we are full of gratitude and respect. “, he added. “We do not lose sight that today’s society has new expectations for platform companies, as we have to shoulder more responsibilities in the economic and social development of the nation.”

Beijing has long feared that the influence of tech companies on the financial sector could make this sector vulnerable – Ant, for example, now controls more than half of China’s mobile payments market – and officials have sought ways to rein them in. .

$15 billion worth of Tencent shares sold in a single transaction

Other tech companies could be next in the line of fire.

Regulators have questioned the leaders of Tencent (TCEHY) and Pinduo-duo (PDD)punished Bytedance, owner of TikTok, and Baidu (BIDU) with fines for alleged monopolistic behavior in business acquisitions, and launched new rules that could govern the operations of many tech companies.
Tencent is would have come under scrutiny for alleged monopolistic practices on its social media app WeChat. The company, which dominates online payments in China through WeChat Pay and owns wildly popular mobile games, said in a statement last month that a recent meeting with regulators was “voluntary”.

“Tencent had regular meetings with regulators, and this was a regular meeting,” he said. “We discussed a wide range of topics, primarily focused on fostering innovation and creating a healthy environment for the evolution of the industry. Tencent has always and will continue to conduct its operations in accordance with the laws and regulations in force.”

— Laura He and Michelle Toh contributed reporting.

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