China imposes mega fine on Alibaba

China has imposed a fine equivalent to 2.3 billion euro on online shopping giant Alibaba for monopoly practices. In December, the Chinese competition watchdog launched an investigation into the empire of billionaire Jack Ma.

Self-regulation

The fine corresponds to 4% of Alibaba’s domestic turnover in 2019, making it the highest ever imposed by the Chinese government. According to the regulator, the platform would have used its dominant market position to disadvantage traders who also offered their goods through competing platforms.

Alibaba will now have to take various measures to ensure fair competition and respect consumer rights. In the next three years, Jack Ma’s company must also submit self-regulation reports to the regulator.

Power struggle

Alibaba – and especially founder Ma – has been in the crosshairs of the Chinese authorities for some time now. After he openly criticised the economic policy of President Jinping, the Chinese government promptly reacted by blocking the planned IPO of Alibaba sister company Ant Group at the last minute. Ma then did not appear in public for months. Only at the end of January did he appear again in a video message.

The actions against Alibaba are part of Beijing’s wider efforts to curb the power of its own large tech companies. Until recently, these were bound by very few rules.

“Gratitude”

In a reaction, Alibaba says it accepts the fine “with humility”. “This punishment is an important signal to safeguard the free market and to further develop e-commerce platforms. Without help from the Chinese government, Alibaba could never have achieved such strong growth. For that help we are full of gratitude and respect”, the company stated.