Alibaba, otherwise known as Alibaba Group Holding Limited, are a Chinese multinational technology company that specialises in e-commerce, retail, internet, and technology. In recent years, Alibaba has been recognised for its incredible success being valued at 1.3 trillion yuan ($19.82 billion) in assets and have an equity estimation of 870.54 billion yuan ($122.94 billion); both figures are where Alibaba’s figures stood at the end of last year.
However, in recent months, Alibaba’s press has been far from positive. Earlier this month, Alibaba was hit with a record-breaking fine of 18.2 billion yuan ($3.6 billion) for abusing its dominance within the market.
China’s state-run anti-monopoly bureau has constricted its regulations on the big tech giants prevalent in China as displayed by their action to fine China’s biggest largest e-commerce company. The anti-monopoly investigation into Alibaba arose when it became apparent that Alibaba was abusing their top position within the market for years by forcing merchants to decide whom they wanted to do business with; the choices were between Alibaba’s competitors and Alibaba themselves.
Chinese tech firms have been founded and built upon an environment that has little to no regulation; the option to operate in a ‘wild west’ fashion is a philosophy of ‘crossing the bridge when it comes. The Chinese government, for a very long time, has supported this philosophy which in turn has allowed companies like Alibaba to get away with their abuse of power and for such a period.
On the 12th of this month, Chinese digital payments firm Ant Group, an affiliate of Alibaba, announced a dramatic change to their restructuring plan with officials forcing the firm to act more like a bank and less like a tech firm. The following day, 34 companies, who are perceived to be the ‘who’s who of the Chinese tech world were called up to a meeting with regulators and were told that Alibaba should be a lesson.
Alibaba, the Chinese tech world, is viewed to be the ‘grandfather’ of China’s tech industry because of the large proportion of the market that it dominates; they have over 800 million users in China alone. Alibaba’s fine is being apprehended as a wake-up call for others in the tech industry, alongside the record-breaking fine and this implies Alibaba Group are also being officially reprimanded. Although the fine is record-breaking, the fine only comes at 4% of what the firm earned in 2019.
Since being fined, Alibaba has issued an apology which was accepting the fine they’ve been given and also opting to comply in the future with the rules and regulations concerning policy implementation. Whilst accepting the apology, the whereabouts of the company’s founder, Jack Ma, is still in question.
The October of last year, Ma had been in the press for causing friction with the Chinese president due to having criticised China’s financial watchdogs, banks, and state-managed financial sector. Consequently, he was hauled into a series of meetings with regulators and soon after that, Ma has not been seen in public.
Ma’s sudden departure from the public eye is viewed to be one of many developments that indicate a big change in the regulation of China’s digital space.
Conclusively, Alibaba’s attempt to monopolise the tech market within China is an indication of the compliance of the Chinese government and the approach to having little to no regulation in the early days of founding many Chinese tech companies.
Consequently, the little to no regulation has aided Alibaba in abusing its power being the biggest e-commerce firm in China and in turn, this has led to investigations that have led to a record-breaking fine being handed out. The fine has been a large indicator of the change in policy within the Chinese tech world and the hope is for this not to become a regular occurrence.
To keep up with the latest commercial news, click on commercial to get your daily dose.
Donate & Support