Market regulators have reported that shares in Alibaba surged;after the e-commerce company noted earlier today, 12th April, that the record $2.8bn fine handed down;by Chinese regulators marked the end of an investigation into anti-competitive practices at the company.
Top executives at the company, founded by the billionaire Jack Ma, told investors that while Chinese regulators continued;a wider investigation into the conglomerates in the country’s tech industry, they believed;the multibillion dollar fine announced at the weekend marked the end of the focus on Alibaba.
“We are pleased we can put this matter behind us,” said Joe Tsai, the executive vice-chair of Alibaba Group.
“With this penalty decision, we’ve received good guidance on some of the specific issues under the anti-monopoly law. Other than the mergers review, we’re not aware of any other [antitrust] issues”.
The company is listed in Hong Kong and its shares climbed as much as 9% on the management’s comments.
China’s market regulators imposed the fine on Alibaba, worth 4% of its domestic revenues in 2019. While the $2.8bn fine is a record by Chinese regulators,;it is also far less than the maximum 10% of revenues that Alibaba could have faced.
The fine was levied because the company restricted;merchants that use its website from doing business or running promotions on rival e-commerce platforms.
Alibaba said that it will spend “billions of dollars” to improve the experience of merchants on its site.
Crackdown on big tech
While Alibaba no longer faces any further investigations, it still has to comply with a “comprehensive rectification” programme.
The company became the ‘scapegoat’ in the crackdown on big tech after Ma, one of China’s most popular, outspoken and wealthiest entrepreneurs, gave a blunt speech in 2020 criticizing national regulators, that reportedly infuriated President Xi Jinping.
After the comments, Chinese regulators blocked the $34bn stock market flotation of the Alibaba online payments subsidiary Ant Group. The floatation would have been the biggest share offering in history.
Last month, Beijing also ordered Alibaba to sell off some of its media assets, which include Hong Kong’s South China Morning Post.
In a separate development, China’s central bank also announced that Ant Group will restructure as a financial holding company, a move expected to curb its profitability and valuation.
The People’s Bank of China said that under a “comprehensive and feasible restructuring plan”, Ant would cut the “improper” linkage between the payments service Alipay, the virtual credit card business, Jiebei and the consumer loan unit, Huabei.
The central bank also asked Ant to break its “monopoly on information, and strictly comply with the requirements of credit information business regulation”.
The company has agreed to improve corporate governance and “rectify illegal financial activities in credit, insurance and wealth management”, the central bank said.
The central bank said it had also asked Ant to control its leverage and product risks, to control the liquidity risk of its flagship fund products and to “actively lower” the size of its massive Yu’E Bao money market fund.
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