Alibaba Unaware of Other Probes Under Anti-Monopoly Law
(Bloomberg) -- Alibaba Group Holding Ltd. said that it’s unaware of any other probes by China’s antitrust regulator after the e-commerce giant was slapped with a record fine for its business practices.
Apart from inquiries into mergers, acquisitions and strategic investments that span the entire internet industry, the company isn’t aware of any other investigations into its business by the State Administration for Market Regulation, executives told analysts on a conference call Monday. Going ahead, the firm will focus on providing better services for its customers and merchants while complying with regulators.
“We experienced this scrutiny and we’re happy to get this matter behind us,” Vice Chairman Joseph Tsai told analysts. Large-scale internet companies are doing a lot of things to grow the economy, he added, “and we’re in the middle of this, promoting government policy.”
Beijing fined Alibaba a record $2.8 billion after wrapping up a landmark probe into China’s e-commerce leader in just four months, versus the years such investigations take in the U.S. or Europe. That sent a clear message to the country’s largest corporations and their leaders that anti-competitive behavior will have consequences.
Following the probe into the e-commerce platform, regulators will now be keen to look at other areas where unfair competition may exist, Tsai said. They are also focusing on data privacy and protection, something that the firm is cooperating with the government on.
For Alibaba, the fine was less severe than many feared and helps lift a cloud of uncertainty hanging over founder Jack Ma’s internet empire. The 18.2 billion yuan penalty was based on just 4% of the internet giant’s 2019 domestic revenue, regulators said. While that’s triple the previous high of almost $1 billion that U.S. chipmaker Qualcomm Inc. handed over in 2015, it’s far less than the maximum 10% allowed under Chinese law.
The fine came with a plethora of “rectifications” that Alibaba will have to put in place -- such as curtailing the practice of forcing merchants to choose between Alibaba or a competing platform -- many of which the company had already pledged to establish.
Alibaba on Monday said it doesn’t rely on exclusivity to retain merchants and doesn’t expect “material negative impact” from changes to such arrangements. Only a small number of flagship stores had been under exclusive arrangements previously, but businesses today are operating on multiple platforms, Chief Executive Officer Daniel Zhang said.
The impact of the fine will be reflected in the company’s earnings for the March quarter. Alibaba has also set aside billions of yuan of additional spending to support initiatives for merchants, executives said.
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