China imposed a record fine of 18 billion yuan ($ 2.75 billion) on Alibaba Group Holdings Limited on Saturday, after an antitrust investigation found that the e-commerce giant had misused its dominant market position for several years.
The fine, which amounts to about 4 percent of Alibaba’s domestic revenue for 2019, comes amid a crackdown on tech conglomerates.
The record fine marks China’s antitrust measure entering a new era for internet platforms after years of laissez-faire.
Alibaba’s business empire has come under intense scrutiny in China since its billionaire founder (Jack Ma) publicly criticized the country’s regulatory system in October.
A month later, the authorities halted a planned $ 37 billion initial public offering of Ant Group, the online financial arm of Alibaba, which was set to be the world’s largest ever.
And the State Administration for Market Regulation announced SAMR Reported its antitrust investigation against the company in December.
While the fine brings Alibaba one step closer to resolving antitrust issues, Ant Group still needs to agree to a renewal that is expected to sharply lower its valuations and rein in some of its businesses.
SAMR said it has determined that Alibaba has been abusing its market dominance since 2015 by preventing merchants from using other online e-commerce platforms.
The regulator added that this practice, previously described by SAMR as illegal, violates China’s antitrust law by impeding the free circulation of goods and infringing on the commercial interests of traders.
In addition to imposing the fine, which ranks among the highest antitrust penalties in the world, the regulator has ordered Alibaba to make sweeping corrections to enhance internal compliance and protect consumer rights.
Alibaba said in a statement: It accepts the punishment and ensures its commitment firmly, and the CEO of the company said in a note to employees: We deal with the matter openly and work through it together, and let us improve ourselves and start together again as one.
The fine is more than double the $ 975 million that Qualcomm in China paid in 2015 for anti-competitive practices.
The heavy penalty comes as regulators around the world are conducting tougher antitrust reviews of tech giants such as Google and Facebook.
And with the fine imposed on one of its most successful private companies, Beijing’s threats to clamp down on the platform economy and rein in the giants that play a dominant role in the nation’s consumer sector are moving in steady pace.
China’s large tech companies are ramping up hiring legal experts and compliance specialists and allocating funds for potential fines, amid an anti-trust campaign and data privacy from regulators.
The Chinese state media praised the sentence, saying it set an example and raised awareness about antitrust practices and the need to abide by relevant laws.