Alibaba, one of the biggest technology empires in the world and one of China’s earlier exports to the global market, has been slapped with a $2.8 billion (~Rs 21,000 crore) fine in the company’s home market. The company faced an antitrust and anti-competitive probe last year from the Chinese State Administration for Market Regulation for what was labelled as “suspected monopolistic conduct”. Now, the Chinese government body has labelled charges stating that Alibaba’s vendor registration policies are actively hindering innovation in the online retail space to help the company retain its monopoly in the market.
The fines imposed by the Chinese regulator will rank among the biggest antitrust fines ever imposed by any governing body around the world. The European antitrust regulator had fined Google in 2017 and 2018 with staggering penalties of €4.3 billion (~Rs 38,500 crore) and €2.4 billion (~Rs 21,000 crore). The latest penalty that Alibaba faces in China is to the same tune, and will make for the biggest penalty that a technology company will pay in China. The previous biggest fine faced by any technology company in China was the $975 million (~Rs 7,300 crore) penalty that Qualcomm faced for its chipset monopoly in the country.
The main draw that the Chinese regulators levelled against Alibaba was its seller policies, where the e-commerce major stated maintained that vendors who market their products on Alibaba cannot sell on rival e-commerce platforms. Given Alibaba’s dominant market position in terms of its user base, this seemingly forces vendors to sell on their platforms only in order to gain a fruitful business. As a result, the regulators have alleged that the move is stopping progress in terms of innovation in the Chinese e-commerce market.
Incidentally, Alibaba founder Jack Ma also stands at an unfavourable point with the Chinese government. The latter faced governmental backlash after calling out Chinese banks as “state owned pawnshops”. The company has since faced consistent regulation, and Ma’s Ant Group, which was also primed for its IPO, has since been blocked by the Shanghai Stock Exchange.