In January, Jack Ma, CEO of Chinese e-commerce giant Alibaba, made his first appearance in public view since going dark for three months. Ma disappeared after Chinese regulators began investigating Alibaba in December for alleged anti-competitive behavior. Regulators were looking to see if the company was preventing sellers from selling their products on rival e-commerce platforms — it looks like regulators have finally found what they’re looking for.
On Saturday, Chinese state media reported that Alibaba had been slapped with a record $2.8 billion fine. The fine comes after regulators concluded Alibaba was engaging in anti-competitive behavior, acting like a monopoly.
In recent months, Beijing has strengthened its grip on China’s national tech giants as part of a regulatory crackdown on online companies that President Xi Jinping says is key to maintaining social stability.
Alibaba is arguably one of China’s most successful private businesses, and Jack Ma is arguably China’s most famous billionaire. By making an example out of such a distinguished business, Chinese regulators are sending a strong message to the country’s powerful tech companies.
The record fine is equal to 4% of Alibaba’s domestic sales in 2019, and it breaks the previous record fine of $975 million to American chipmaker Qualcomm in 2015. In a statement, Alibaba said they accepted the $2.8 billion fine and will improve.
As China’s tech companies continue to grow into behemoths, Chinese regulators are becoming very concerned about the power these companies have. Alibaba isn’t the first and likely won’t be the last Chinese tech giant to face scrutiny from Chinese regulators.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.