Chinese regulator hits Alibaba with $2.8b fine following monopoly probe

Details:

• The fine was based on 4% of Alibaba’s domestic revenue in 2019 and amounts to about 12% of its fiscal 2020 net income.
• The Hangzhou-based firm will be required to initiate “comprehensive rectifications,” including strengthening internal controls, protecting merchants and customers, and supporting fair competition. It will need to submit self-regulation reports to the government for three consecutive years as well.
• Its CEO Daniel Zhang said on Monday that the company does not expect any material impact from the antitrust crackdown in China, and will make it easier for merchants to do business with it.
• Its shares increased by about 8% in the afternoon trade in Hong Kong, adding US$48.5 billion to its market value.

Context:

• The government said some of Alibaba’s practices restricted competition, such as its merchant exclusivity rule of “pick one from two.”
• Following the development, the State Administration for Market Regulation might take further actions targeting the tech giant. Previously, it was reported that the Chinese government wanted Alibaba to sell some of its media assets, including the South China Morning Post, over concerns about the firm’s influence over public opinion in the country.