The Chinese government has hit Jack Ma’s Alibaba with a $2.8 billion penalty due to its apparent monopolizing practices. This is what came out after the antitrust investigation made by the State Administration for Market Regulation.
The State Administration for Market Regulation of China has conducted an investigation last December concerning the giant e-commerce Alibaba. The probe pertains to the alleged monopolizing practices of Jack Ma’s Alibaba, says Mariella Moon of Engadget. Resulting in the $2.8 billion penalty against Alibaba.
Exclusivity is a way to get rid of competition
Particularly, the Chinese authorities looked closely into Alibaba’s policy that compels merchants to sell their products exclusively in Alibaba’s platforms. This exclusivity policy blocks the merchants to sell their products through other rival e-commerce platforms.
The Chinese regulators take this as monopolizing the market by restricting and getting rid of competition in the country. This kind of practice can become a stumbling block to innovation in the online platform segment.
As a consequence of that conclusion, the authorities fined the giant e-commerce company according to the Chinese anti-monopoly law. Demanding it to freeze its illegal activities and to pay the penalty amounting to 4% of its total domestic sales in the country.
Similar violation: Alibaba’s $2.8 billion penalty vs Qualcomm’s $975 million penalty
In a statement made to reporters, Alibaba said that it will abide with the penalty. It will pay the Chinese government the $2.8 billion penalty and will do what it takes to correct what’s needed.
Some analysts note that the $2.8 billion penalty will not in any way harm Alibaba’s financial standing. But it is much higher than the fine the Chinese regulator obliged Qualcomm the $975 million penalty for similar violation. In 2015, the Chinese authorities penalized Qualcomm for the violation of the anti-monopoly law.
Apparently, China began giving a closer look at the tech giant companies starting last year. Some of the Chinese lawmakers have proposed to amend the anti-monopoly law to accommodate the recent development.
However, it seems that Jack Ma’s businesses have become the target over this development. This happened after Jack Ma’s uncalled for comments on the Chinese banks. Allegedly, Jack Ma called the Chinese banks as the “state-owned pawnshops” for carrying out unwarranted loans. Jack Ma made this statement in one of the finance summits. Jack Ma’s executives had to form a special task force to deal with regulations every day.
Other than the anti-monopoly case vs. Alibaba, the Shanghai Stock Exchange also has put a blockage for the Ant Group. The financial services company Ant Group, another company founded by Jack Ma, planned to tender an Initial Public Offering (IPO). Before the year ended last year, in November, the Chinese authorities halted the highly anticipated IPO of the Ant Group. In a statement made by the Shanghai Stock Exchange, it had suspended the company’s listing due to some major issues. Issues that could be in violation to the IPO’s conditions or disclosure requirements. The IPO of Ant Group in Hong Kong was also suspended.