Key Points:
- Alibaba has completed a three-year regulatory “rectification” process following a 2021 antitrust fine for monopolistic practices, China’s market regulator announced on Friday.
- The State Administration for Market Regulation (SAMR) said it has supervised Alibaba’s compliance with antitrust rules over the past few years.
- Alibaba has fully stopped its “‘choose one of two’ monopoly behavior,” according to the SAMR.
Alibaba has officially wrapped up a three-year regulatory “rectification” process after receiving a significant antitrust fine in 2021 for monopolistic practices, China’s market regulator confirmed on Friday.
Following the announcement, Alibaba shares rose nearly 3% during Friday’s trading session.
The State Administration for Market Regulation (SAMR) stated that it had been overseeing Alibaba’s adherence to antitrust regulations for the past few years. The regulatory process has delivered “good results,” according to the SAMR in a translated statement.
Back in 2021, SAMR imposed an 18.23 billion yuan ($2.6 billion) fine on Alibaba as part of an anti-monopoly investigation. The fine centered on Alibaba’s practice of requiring merchants to choose between two e-commerce platforms, preventing them from working with both.
At the time, SAMR said this “choose one” policy allowed Alibaba to strengthen its market dominance and gain an unfair competitive edge.
Since then, SAMR has closely monitored Alibaba’s compliance efforts, and as of Friday, Alibaba has fully stopped its “‘choose one of two’ monopoly behavior,” SAMR confirmed.
The regulator also noted it will continue guiding Alibaba to improve its compliance, operational efficiency, and innovation efforts.
This marks the conclusion of one of Alibaba’s most difficult regulatory challenges with Beijing. In a note on Friday, Jefferies analysts called the end of the regulatory process a “positive” development for Alibaba, stating, “It highlights this is a new start and ensures compliance in operations.”
The announcement may also signal a softening stance from Chinese regulators towards private tech companies, following the intense crackdown that began in late 2020. During that time, Beijing introduced several new regulations aimed at curbing the influence of domestic tech giants across various areas, including antitrust and gaming.
Alibaba’s founder, Jack Ma, and his business empire have been under the regulatory spotlight since 2020, when the planned IPO of his financial technology firm, Ant Group, was halted by regulators. Ant Group has also undergone its own regulatory rectification process, with most issues resolved by last year.
These regulatory pressures have weighed heavily on Alibaba’s stock, which has fallen more than 70% from its 2020 peak. Recently, Alibaba has faced slower growth amid increasing competition in China’s e-commerce sector and a cautious Chinese consumer market.
Despite these challenges, Alibaba showed early signs of recovery in the June quarter, with cloud computing revenue picking up and e-commerce transactions remaining healthy.
Source: CNBC
