Why Alibaba Just Got Hit With A Record $2.87 Billion Fine In China

[ad_1]

The regulatory troubles that have beset Jack Ma since November may be nearing their end, culminating in a hefty fine slapped on the Chinese tech entrepreneur’s biggest brand.

What Happened: China fined Ma’s Alibaba Group Holding Ltd (NYSE: BABA) a record $2.8 billion after a monopoly probe found that the company had abused its dominant market position, Reuters reported.

The regulator also ordered Alibaba to make “thorough rectifications” to strengthen internal compliance and protect consumer rights.

The Chinese government said that Alibaba had used anti-competitive practices in its online retail market.

According to state-run Xinhua news agency, the penalty came from the State Administration for Market Regulation, which had been investigating it since December. The size of the penalty was determined after regulators decided to fine Alibaba 4% of its 2019 sales of 455.7 billion yuan.

The fine is more than double the $975 million fine that China issued to QUALCOMM, Inc. (NASDAQ: QCOM) in 2015 for anticompetitive practices.

In a press statement, Alibaba said, “Alibaba accepts the penalty with sincerity and will ensure its compliance with determination.”

“To serve its responsibility to society, Alibaba will operate in accordance with the law with utmost diligence, continue to strengthen its compliance systems and build on growth through innovation,” the company added.

Alibaba will hold a conference call on Monday to discuss the penalty.

Why It Matters: The outspoken Ma has long been the most visible figure of China’s economic rise and stands out in a culture where getting attention at high levels is perilous. Alibaba, in particular, has been under scrutiny since last October when Ma criticized China’s banking sector as operating with a “pawnshop mentality.” The government scuttled the planned blockbuster Ant Group IPO shortly after Ma made the comments.

Chinese regulators are increasing their pressure on Ma and his powerhouse companies, Ant Group Co., Alibaba Group Holding Ltd. and Alibaba’s media holdings.

Last year, the People’s Bank of China, the country’s central bank, instructed Ant Group to “rectify” how it does business.

Ma’s Alibaba Group and other leading tech companies in China have been scrutinized by regulators over their growing influence in the country.

Technology firms in China have been hiring legal experts and setting aside funds for potential fines amid the antitrust and data privacy crackdown by regulators.

Photo courtesy: World Economic Forum via Wikimedia

See more from Benzinga

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

[ad_2]

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

Battlefield 2042 Specialists & launch maps revealed By EA
Latest News

Battlefield 2042 Specialists & launch maps revealed By EA

After months of speculation, EA and DICE have finally unveiled Battlefield 2042, with the reveal trailer already live and a gameplay one set to premiere on Sunday, during Microsoft’s E3 conference. There may be additional information released at that point but for now we already know quite a bit about the new maps and the Specialists, 2042’s version of the […]

Read More
UK Travel Green List & Rules for entering
Latest News

UK Travel Green List & Rules for entering

Red list countries and territories What you must do if you have been in a country or territory on the red list in the 10 days before you arrive in England. If you have been in a country or territory on the red list in the last 10 days you will only be allowed to […]

Read More
Latest News

Belarus to face Slovakia in 2021 IIHF World Championship opener

Belarus will open the 2021 IIHF World Championship against Slovakia in Riga on 21 May, BelTA has learned. The Group B match will be played at the Olympic Sport Center. The faceoff is at 20.10. Belarus 5 TV channel will broadcast the match live. Ahead of the IIHF World Championship Belarus played a number of […]

Read More