Alibaba is Fined $2.8 Billion By China in Monopolies Probe

China’s e-commerce and entertainment industry giant Alibaba Group has been hit with a fine of RMB18.23 billion ($2.8 billion) for alleged monopoly activities.

The record punishment was announced Saturday morning local time by China’s State Administration for Market Regulation, which accused Alibaba of abusing its market dominance.

The SAMR opened a formal investigation into the company on Dec. 24, 2020. On Saturday it said that the probe found that Alibaba had hindered competition in online retail in China, dented innovation in the internet economy and harmed consumer interests.

Of particular concern was a practice where Alibaba is alleged to have forced third party merchants to operate exclusively or not at all on Alibaba’s platform. The policy is unofficially known as “choose one of two.”

“Alibaba accepts the penalty with sincerity and will ensure its compliance with determination,” Alibaba said in a statement, in response. “To serve its responsibility to society, Alibaba will operate in accordance with the law with utmost diligence, continue to strengthen its compliance systems and build on growth through innovation.”

Authorities in China signaled last year that they were becoming concerned by the scale of the country’s leading tech giants. Their size meant that they could reduce competition, affect prices and use data and information across a huge range of activities that stretch from groceries to video-on-demand and online payments

With their huge social media networks and messaging services the platform companies also have the potential to influence public opinion and shape social affairs, both matters that the Communist Party aims to keep for itself.

The fine represents approximately 4% of Alibaba’s annual revenue in China, according to the regulator. The law offers a ceiling of 10% of revenue. Nevertheless, the Alibaba penalty is more than double the $975 million fine imposed on chip maker Qualcomm in 2015.

Alibaba will be required to carry out a comprehensive revamp of its operations and come up with a “self-examination compliance report” over the next three years. In recent weeks there had been suggestions that Alibaba might have to break up or divest its media and entertainment businesses. No such move was included in Saturday’s announcement.

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