Chinese regulators have fined Alibaba a record 18 billion yuan (about $ 2.75 billion) for violating antimonopoly rules when the country tried to contain the power of its largest internet conglomerates.
In November, China proposed comprehensive antitrust legislation targeting its economy. In late December, the state market regulator announced it had launched an antitrust investigation into Alibaba weeks after authorities canceled the IPO of Ant Group, Alibaba’s finance company.
SAMR, the country’s top market regulator, announced on Saturday that Alibaba had “abused market dominance” since 2015 by forcing its Chinese traders to sell exclusively on an e-commerce platform rather than freely choosing between different services to let, such as Pinduoduo and JD.com. Vendors are often pressured to join Alibaba to capitalize on its huge user base.
Since late 2020, a number of internet giants, including Tencent and Alibaba, have been fined various times for violating anti-competitive practices, such as failing to clarify previous acquisitions with regulators. The meager amounts of these penalties have been symbolic at best compared to the benefits tech firms are getting from their market concentration. No company has been told to break up their empire and users still have to switch between different super apps that are blocking each other.
However, in the past few weeks there have been signs that China’s antitrust authorities are getting more serious. The latest fine on Alibaba represents 4% of the company’s 2019 sales in China.
“Today we received the decision on the administrative fine issued by the State Administration for Market Regulation of the People’s Republic of China,” Alibaba said in a statement. “We sincerely accept the punishment and will make sure we keep the resolve. In order to live up to our responsibility to society, we will proceed with the greatest care in accordance with the law, further strengthen our compliance systems and build on growth through innovation. “
The thick walls that tech companies build against each other are also collapsing. Alibaba recently submitted an application to run its shopping offers app on WeChat’s mini program platform.
For years, Alibaba services have been absent from Tencent’s sprawling lite app ecosystem, which now features millions of third-party services. Conversely, WeChat is missing as a payment method on Alibaba’s online marketplaces. If approved, the WeChat-powered Alibaba mini-app would break the long-distance precedent of the couple.