Editorial | Even China’s tech giants have to play by the rules of the market
- Record US$2.8 billion penalty imposed on Alibaba shows that the government is serious about antitrust regulations and that the platform-based internet economy not only grows, but also benefits ordinary consumers
If there is a milestone for competition and consumer choice in digital markets in the face of dominance by technology giants, perhaps it is to be found in the investigation by Chinese regulators that resulted in a US$2.8 billion fine on Alibaba Group Holding, the world’s largest e-commerce company.
The antitrust investigation has clouded the outlook for Alibaba, owner of the South China Morning Post, ever since the authorities introduced new regulations that forced suspension of its fintech affiliate Ant Group’s US$37 billion IPO last November. The fine is a record, though the regulators limited it to 4 per cent of Alibaba’s 2019 revenue instead of the maximum 10 per cent.
More importantly for the company and markets, it has cleared the air. The end of uncertainty is reflected in Alibaba’s buoyant share price on Monday.
The State Administration for Market Regulation found that Alibaba dominated its market segment through its e-commerce platforms including Tmall and Taobao with a share of more than 50 per cent, and exerted control with strong financial and technological advantages.
Under China’s anti-monopoly law, a company cannot inhibit merchants from doing business with competitors without justifiable reason. According to state media, Alibaba had hindered free and fair competition in the online market and damaged the interests of consumers.
Company executives found a silver lining for investors, saying Beijing’s decision not only had no material negative impact on the company’s business, but had cleared up regulatory uncertainties.