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China fines Alibaba $2.8 billion after antitrust investigation

China fines Alibaba $2.8 billion after antitrust investigation

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The Chinese government said the retail giant stifled competition

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Alibaba Nanjing Headquarters
Photo by Fang Dongxu/VCG via Getty Images

China has hit Alibaba, one of the country’s biggest online retailers, with a record $2.8 billion (18.2 billion yuan) fine, after an investigation found the ecommerce giant violated China’s anti-monopoly law, The New York Times reported. The fine, which represents 4 percent of Alibaba’s 2019 domestic sales, is three times higher than the $975 million fine China imposed on US chip company Qualcomm back in 2015.

The Chinese government launched an investigation into Alibaba in December to determine whether the company was preventing merchants from selling their products on other platforms. China’s market regulator found that Alibaba’s practices had a negative effect on online retail competition and innovation. Alibaba used data and algorithms to strengthen its own position in the marketplace, resulting in an “improper competitive advantage,” China’s State Administration for Market Regulation said in a statement. The company will have to reduce its anticompetitive tactics and provide compliance reports to the government for the next three years.

Alibaba said in a statement it accepted the fine and pledged to make improvements to better serve its “responsibility to society.”

“We will further strengthen our focus on customer value creation and customer experience, as well as continuing to introduce measures to lower entry barriers and business costs of operating on our platforms,” the company’s statement reads. “We are committed to ensuring an operating environment for our merchants and partners that is more open, more equitable, more efficient and more inclusive in sharing the fruits of growth.”

The hefty fine is not likely to hurt Alibaba’s bottom line too severely, however; in February, the company reported a third quarter profit — for the final three months of calendar year 2020 alone— of $12 billion.

Correction: An earlier version of this story had an incorrect figure for the fine China imposed on Qualcomm. It was $975 million. We regret the error.