A $2.8bn fine for Alibaba and plans to expand regulatory powers show that China is serious about tackling online monopolies
Regulators sanction one of China’s biggest companies: Perhaps unexpectedly, China is joining the group of countries that appear determined to reign in the market power of Big Tech. At the weekend, the State Administration for Market Regulation (SAMR) handed out a $2.8bn fine to one of the country’s largest tech companies, Alibaba, after an investigation found the company had abused its market power since 2015. In particular, the SAMR found that Alibaba was stopping sellers from using other platforms to market their products by enforcing a ‘choose one out of two’ clause. The SAMR found that the practice restricted competition in China, and affected innovation and the development of the platform economy.
Alibaba accepts the fine and pledges to change: In a statement, Alibaba accepted the considerable fine without criticising the decision of the SAMR, and in fact accepted the need to change its behaviour to match the expectations of regulators, praising their action to ‘safeguard fair market competition’. The company appears to have changed tone towards the Government compared to recent months. The wording of the statement appears very distant for instance from the open criticism that Alibaba’s founder, Jack Ma, voiced in October 2020 when he hit out at the Chinese financial system and argued that regulators in the country were stifling innovation.
Chinese regulators have not finished: The Chinese Government is reportedly expanding the staff of the SAMR from the current 40 to about 60–70 (still relatively small for the world’s most populous country), and to increase budgets for antimonopoly investigations. Local bureaus will also be given the power to review cases. Stricter competition laws have also recently been passed, which explicitly prevent e-commerce platforms from forcing vendors to deal with them exclusively. The SAMR had already fined 12 companies in March this year, for deals that violated these rules. These include Tencent, Baidu, SoftBank, and ByteDance (which controls TikTok).
Source: http://www.samr.gov.cn/xw/zj/202104/t20210410_327702.html
