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Record antitrust fines make Alibaba shares soar



The e-commerce group founded by billionaire Jack Ma said a record $2.8 billion fine last weekend marked the end of an antitrust investigation against the company, and Alibaba’s stock price rose sharply on Monday.

Executives said at an analyst meeting that although regulators are still investigating China’s broader technology industry regarding past mergers and acquisitions, they are not aware of any more specific investigations into Alibaba’s business. After the above remarks, the company’s shares listed in Hong Kong rose by 7.8%.

“Apart from the merger review, we don’t know of any other [antitrust issues]”

;Joe Tsai, executive vice chairman of Alibaba, said in a phone call with analysts. He added: “We are very happy to leave this matter behind. “

China’s market regulator imposed a fine on Alibaba, which is equivalent to 4% of its domestic revenue in 2019, for anti-competitive practices against merchants using its e-commerce platform.

Although this is the highest record of the country’s previous light-touch regulator, it is lower than the maximum 10% fine that the law may impose.

The antitrust investigation of Alibaba is just one of the problems Ma Yun faces. At the request of regulators, Alibaba’s sister payment company Ant Group’s planned $37 billion issuance was cancelled at the last minute.

Since October, Jack Ma has made only one brief public appearance since his speech at a forum in Shanghai. At the time, many people thought that this angered China’s regulators. The authorities also issued regulations restricting online lending, which was one of Ant Group’s previous growth areas.

The regulator first announced an investigation into Alibaba at the end of December, and Alibaba’s stock price has fallen by 13% in the period ending last week.

Although Saturday’s fine marks the end of the investigation, the group will have to comply with a “comprehensive rectification” plan and review past mergers and acquisitions.

In December last year, Alibaba was fined nominally for failing to seek regulatory approval for past transactions, thus ending the period when foreign listed companies were effectively exempt from such approvals.

Alibaba and Chinese social media rival Tencent are one of Asia’s largest traders, investing in hundreds of start-ups each year.

In its ruling on Alibaba’s anti-competitive behavior, China’s State Administration for Market Regulation stated that the company has forced merchants to specialize in listing transactions on its shopping platforms, which is called “choosing one of the two”. On Monday, Alibaba said it would spend “billions of dollars” to improve the merchant experience.

“We don’t need exclusive arrangements to retain our businessmen,” said Alibaba CEO Daniel Zhang. He said the company will reduce the cost of businesses operating on its platform by, for example, providing some services for free.

Zhang added that the organization will not appeal the decision. This is in stark contrast to Alibaba’s more resolute claims to regulators six years ago, when Alibaba fought back against government criticism of counterfeit goods. On Saturday, Alibaba praised regulators’ “thought-out” expectations of the Internet industry.

China’s brave antitrust regulator has taken crazy actions against technology companies and issued guidelines covering this area in March.

Cai said that global investors should draw conclusions from antitrust inferences that regulators support Alibaba’s business model and created the term “platform economy” legally.

Cai said: “The regulatory agencies fully affirmed our business model, which is good for the national economy and promoting innovation.” He added that the company is consistent with the government’s policy of digitizing the economy.

Video: Why Ant Financial was cancelled


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