The anti-monopoly investigation against Chinese e-commerce giant Alibaba Group has finally been settled with an astronomical fine of RMB 18.2 billion. Some analysts believe that Alibaba may just be the “bird in the head”, and more platform giants may be affected subsequently.
More platform giants in China are scared as Alibaba receives a sky-high anti-monopoly fine. According to a Reuters report, the anti-monopoly investigation against Chinese e-commerce giant Alibaba Group has finally been settled with an astronomical fine of 18.2 billion yuan. The result shows China’s firm determination to clean up its platform economy, which in turn will help Alibaba get back on track by removing the “sword of Damocles” hanging over its head.
However, analysts also believe that although the official punishment for Alibaba’s online sales business is clear, the company still has other businesses such as media that may face some adjustments and needs to pay attention to the impact of the “aftershock”; moreover, in the context of China’s strict regulation of the monopolistic behavior of the platform economy, this time Alibaba may just be the “bird in the head”. “The following may affect more platform giants.
China’s State Administration of Market Supervision and Administration announced earlier Saturday that it had imposed an administrative penalty on Alibaba Group for its “two-for-one” monopoly in the online retail platform services market in China, imposing a fine of 4% of its 2019 sales of 455.712 billion yuan in China, or a total of 18.228 billion yuan. The company then responded that it “sincerely accepts and resolutely obeys” and will strengthen its operation in accordance with the law.
The official media People’s Daily commented that the punishment is a specific measure by the regulator to strengthen anti-monopoly and prevent disorderly expansion of capital, and is an effective regulation of illegal and irregular behavior of platform enterprises, which does not mean that the state’s attitude of supporting the development of the platform economy has changed, but rather to adhere to both development and regulation, establish a sound platform economy governance system, and promote the standardized and healthy sustainable development of the platform economy.
According to the report, Alibaba founder Jack Ma publicly criticized the regulatory system in October last year, triggering a series of incidents. The IPO of Alibaba affiliate Ant Group was called off, and Chinese authorities also launched an anti-monopoly investigation into the tech sector, with Alibaba being targeted; in addition, regulators are considering whether Alibaba should divest some assets unrelated to its main online retail business.
At the end of December last year, China’s General Administration of Market Regulation (GAMR) said that it had opened a case against Alibaba Group for alleged monopolistic practices, including “two-for-one” selection, based on reports.
In response to the official punishment, Alibaba has continuously responded, saying that it accepts the punishment “sincerely” while also pointing out that it will introduce a series of measures to lower the threshold and reduce the operating costs of the platform. A statement released by the company’s official micro-signal pointed out that the company has fully cooperated with the investigation in the past few months and carefully studied the national policies and requirements for the platform economy; while ensuring the smooth operation of its business, it conducted self-examination and self-examination of the system and improved the upgrade.
Reuters said analysts also pointed out that the punishment for Alibaba may only be the beginning of the purge of the platform economy, and more platform giants are not ruled out in the future. Huang Deji, executive director of Hong Kong’s Goldlion Securities, pointed out that not only Alibaba, but all other Chinese Internet giants as well, including Tencent, the market will begin to speculate which company will be next.
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