Alibaba records first operating loss since 2014 due to anti-monopoly fine

Alibaba recorded a 7.66 billion yuan (US$1.19 billion) operating loss in the fourth quarter ended March 31 following an antitrust probe against the ecommerce giant. It marks Alibaba’s first loss since going public in 2014.

Photo credit: Alibaba Group

The company was recently slapped a record US$2.8 billion fine, amounting to about 12% of its fiscal 2020 net income, after it was put under heavy scrutiny by Chinese regulators for abusing its market dominance. This also led to founder Jack Ma losing the title of China’s richest man.

Other Chinese tech giants Meituan and Tencent have also come under fire for allegedly breaching antitrust laws, including forcing exclusivity agreements.

However, Alibaba increased its annual revenue forecast to 930 billion yuan (US$144.12 billion) for the year ending March 2022, up from an expected 928.25 billion yuan, due to the strong pandemic-driven shift to online shopping.

The firm posted a quarterly revenue of 187,395 million yuan (US$28.6 billion), an increase of 64% year over year.

“We plan to use all of our incremental profits and additional capital in fiscal year 2022 to support our merchants and invest in new businesses and key strategic areas that will help us increase consumer wallet share and penetrate into new addressable markets,” the company said in a statement.

Alibaba’s consumer-facing businesses in China include retail marketplaces, local consumer services, and digital media and entertainment platforms, serving 891 million annual active consumers during the 12 months ended March 31, 2021. Meanwhile, its international retail marketplaces, including AliExpress and Lazada, catered to about 240 million annual active consumers during the same period.

Following the results of the antitrust probe, the Hangzhou-based firm is required to initiate “comprehensive rectifications,” including strengthening internal controls, protecting merchants and customers, and supporting fair competition. It needs to submit self-regulation reports to the government for three consecutive years as well.

Currency converted from  US dollar to Chinese yuan: US$1 = 6.44 yuan.