The penalty equates to about 4 percent of Alibaba’s earnings in 2019 and comes amid Beijing’s unprecedented regulatory crackdown.
Chinese regulators have fined Alibaba Group Holdings Limited 16 billion yuan ($ 2.25 billion) for violating anti-monopoly rules and its dominant market position, marking the highest no-confidence fine in the country.
The fine, equivalent to about 4 percent of Alibaba’s earnings in 2016, came in the wake of an unprecedented crackdown on a growing number of tech companies over the past few months that weighed in on the company’s shares.
Jack Ma’s business empire, the founder of Alibaba’s billionaire, has come under intense scrutiny after sharp criticism of China’s regulatory system in late October.
In late December, China’s State Administration for Market Regulation (SAMR) announced that they would launch an unreliable investigation into the agency.
This came after authorities from Alibaba’s Internet Finance Force Ant Group closed a planned $ 37 billion IPO.
SAMR said Saturday that since the investigation began in December, it has determined that Alibaba has been “abusing market dominance” since 2015 by stopping its merchants from using other online e-commerce platforms.
It said the practice violated China’s anti-monopoly laws, obstructed the free movement of goods and violated the business interests of traders.
SAMR has instructed Alibaba to make “complete amendments” to strengthen internal compliance and protect consumer rights.
“These fines will now be seen by the market as an exclusive anti-litigation case. This is, in fact, the highest profile case against China, “said Hong Hao, head of Bokom International Research in Hong Kong.
“The market has been expecting a kind of fine for some time … but the public needs to pay attention to the measures that have been taken to diversify the resources of the media outside of the exclusive anti-investigation.”
Alibaba said in a statement posted on its official Weibo account that it had “accepted” the decision and would firmly implement SAMR’s ruling. It said it would also work to improve corporate compliance.
The Chinese e-commerce giant said a conference would be called on Monday to discuss the decision on the fine.
Alibaba has come under fire in the past from rivals and vendors, with its merchants barred from listing on other e-commerce platforms.
The practice of refraining from listing traders on competing platforms is long-standing and the regulator has made it illegal according to rules issued in February.
“The fine bill is a milestone and a road sign with the utmost importance,” Xi Jianghong, a member of the State Council’s unreliable advisory committee and a professor at China’s University of Political Science and Law, wrote in the state-sponsored Economic Times.
“This indicates that the application of no-confidence laws to Internet platforms has entered a new era and revealed clear policy signals.”