Analysis | China’s record fine on Alibaba sets an example for technology giants to toe the regulatory line

The record 18.2 billion yuan fine was equal to 4 per cent of Alibaba’s 2019 revenue but shy of the 10 per cent maximum under China’s antitrust law

The regulator factored in the “duration and degree” of Alibaba’s misconduct, and its “in-depth self-examination” and “proactive rectification”

Reading Time:4 minutes

Published: 2:31pm, 11 Apr 2021Updated: 2:31pm, 11 Apr 2021

China’s record fine on one of the largest home-grown corporate champions sets an example for the country’s technology behemoths and aspiring unicorns, showing them that the antitrust regulator is increasingly competent in applying market rules to rein in Big Tech, analysts said.

In a document with more than 12,000 words, the State Administration for Market Regulation (SAMR) outlined its definition of a market, the role of Alibaba Group Holding as a participant, and the company’s dealings with merchants and customers before slapping a penalty of 18.2 billion yuan (US$2.8 billion) on the world’s largest e-commerce company.

This was a milestone that “offers a reference for the future, as China has never had a case on how to define abuses [of a] dominant market position from the antitrust perspective,” said Zhai Wei, executive director of the Competition Law Research Centre at East China University of Political Science and Law in Shanghai.

The fine, equal to 4 per cent of Alibaba’s 2019 revenue but shy of the 10 per cent maximum stipulated by China’s antitrust law, also served as a bookend after almost four months of investigations that began last Christmas Eve.

In so doing, it offers an object study for antitrust regulators in the European Union and United States as they too grapple with how to ensure competition in digital markets in the face of dominance by Amazon, Apple, Facebook and Google.

Alibaba accepted the ruling and waived its right to appeal, or hold a public hearing, according to the regulator in Beijing.