Chinese authorities have fined Alibaba Group Holding Ltd 18 billion yuan ($ 2.75 billion) for infringing anti-monopoly laws and abusing its monopoly market position, marking the highest fine ever imposed in the country.
The penalty, equivalent to about 4% of Alibaba’s revenue for 2019, comes amid an unprecedented law for the dissolution of home-grown technology organizations over the past few months that has limited corporate shares.
Alibaba's billionaire empire businessman Jack Ma's empire has been placed under intense scrutiny after his strong criticism of China's regulatory system in late October.
In late December, China's State Administration for China Regulation (SAMR) announced that it had launched an investigation to protect the company from the company. That came after authorities suspended a planned $ 37 billion IPO in Ant Group, Alibaba's online financial arm.
SAMR said on Saturday after an investigation launched in December, it found that Alibaba had been "abusing market management" since 2015 by preventing its retailers from using other online e-commerce platforms.
It said the practice violated China's anti-independence law by restricting the free distribution of goods and interfering with the business interests of retailers.
SAMR has instructed Alibaba to make "complete adjustments" to strengthen internal compliance and protect consumer rights.
“This punishment will be seen as the closure of the anti-monarchy case currently on the market. It is indeed the highest anti-independence case in China, ”said Hong Hao, head of research at BOCOM International in Hong Kong.
"The market has been expecting some kind of compensation for some time ... but people need to pay more attention to steps beyond the investigation of independence, such as the division of media assets."
Alibaba in a statement sent to his official Weibo account said he "welcomes" the decision and will apply the SAMR decision. He said it would also work to improve corporate compliance.
The Chinese e-commerce giant said it would hold a conference call on Monday to discuss the sentencing decision.
Alibaba has previously been criticized by rivals and retailers for allegedly barring its retailers from being registered on other commerce platforms.
The practice of barring retailers from registering on rival platforms is a thing of the past, and the regulator described the rules issued in February as illegal.
"The bill is a milestone and a very important road sign," wrote Shi Jianzhong, a member of the State Security Committee and a professor at China University of Political Science and Law, in a government-sponsored Economic Times report.
"It shows that the law to curb corruption on social media has entered a new era, with clear policy indications."
($ 1 = 6.5522 yuan)
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