Alibaba expresses “gratitude” to Chinese regulators after being fined 18.2 billion yuan.
Alibaba has expressed gratitude to Chinese regulators after being fined an astronomical 18.2 billion yuan by the Communist Party of China (CPC), Bloomberg reports, suggesting that Alibaba’s statement reflects how odd the CPC’s anti-monopoly overhaul of tech giants is compared to that of Western countries.
On Saturday (April 10), the Communist Party’s General Administration of Market Regulation (GAMR) fined Alibaba Group 18.2 billion yuan for abusing its dominant market position over competitors and merchants within its e-commerce platform.
The fine of RMB 18.2 billion is equivalent to 4% of the company’s annual revenue in the country, according to the CCP’s General Administration of Market Supervision. Under Chinese regulations, antitrust fines can be as much as 10 percent of a company’s annual revenue.
Bloomberg reported on April 12 that the Chinese e-commerce giant made the unusual move of thanking the regulator for the sky-high fine handed down by the Communist Party.
In an open letter, Alibaba said that “government regulation and services, criticism, tolerance and support from the community have been the key to Alibaba’s growth along the way” and that “for this we are grateful and at the same time reverent.”
Bloomberg reports that Alibaba’s stance highlights how odd the Chinese Communist authorities’ overhaul of tech giants is compared to that of Western countries. If Facebook Inc. or Apple had been handed unprecedented antitrust fines by the U.S. government, Zuckerberg and Cook might not have made such public acknowledgements.
The report also said that the “distinctiveness” of the CCP-regulated antitrust overhaul is evident in almost every aspect. The landmark anti-monopoly investigation of Alibaba by Chinese regulators took only four months, compared to years in Europe and the United States.
On Monday (April 12), Alibaba Vice Chairman Cai Chongxin said on an investor conference call that he was glad the matter was behind him and that the regulatory moves were designed to ensure fair competition.
In addition to the fines, the Communist Party regulator has required Alibaba to make a number of “corrections,” such as requiring “two-for-one” practices for merchants on its platform.
Cai Chongxin said the company is not aware of any antitrust investigations against Alibaba other than the previously discussed investigations into acquisitions and investments by Alibaba and other tech giants.
On Saturday, Alibaba Executive Chairman Zhang Yong announced that the company is ready to come out of the woodwork.
Alibaba’s valuation has evaporated by more than $250 billion since last October as a result of anti-monopoly actions by Chinese Communist Party regulators.
Bloomberg reported that Alibaba, the Chinese e-commerce giant, was quick to admit its mistakes, highlighting its inability to respond to further regulatory action, a dramatic contrast from six years ago, when it publicly disputed the results of a General Administration for Industry and Commerce review of Taobao’s sales of counterfeit goods, and the regulator eventually withdrew the claims.
In addition to anti-monopoly, Chinese Communist government agencies are reportedly reviewing other areas of Jack Ma’s business empire, such as Ant Group’s consumer lending business and Alibaba’s media assets. The shockwaves of this consolidation will continue to reverberate through peers like Tencent Holdings, Baidu and Meituan, which will have to be more cautious in expanding their businesses and making acquisitions for some time to come.
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