Alibaba has successfully completed a three-year regulatory “rectification” process after facing an antitrust fine due to alleged monopolistic practices in 2021, as stated by China’s market regulator. The State Administration for Market Regulation (SAMR) in China announced on Friday that Alibaba has met the necessary requirements to become compliant with antitrust regulations. This achievement has led to a positive response from investors, with Alibaba’s shares rising more than 3% in Friday morning trading.
In 2021, Alibaba was fined 18.23 billion yuan ($2.6 billion) by China’s SAMR as part of an anti-monopoly investigation into the company. The primary focus was on a practice known as the “choose one” policy, which forced merchants to select one of two e-commerce platforms, thus granting Alibaba unfair competitive advantages. Following this fine, the SAMR closely monitored Alibaba’s progress in aligning with regulatory requirements, leading to the recent announcement confirming the completion of the rectification process.
The conclusion of the regulatory overhaul signifies a new beginning for Alibaba and provides assurance to stakeholders regarding the company’s commitment to compliance and operational efficiency. Analysts at Jefferies have characterized this development as positive for Alibaba, underscoring the company’s readiness to navigate regulatory challenges and drive innovation. Additionally, the conclusion of this process is expected to alleviate some of the regulatory uncertainties that have weighed on Alibaba’s stock performance, with shares falling more than 70% from their peak in 2020.
The completion of Alibaba’s regulatory rectification comes amid a broader shift in the stance of Chinese regulators towards private technology firms. Following a series of regulatory measures implemented in late 2020 targeting the power of domestic tech companies, including antitrust regulations and restrictions on gaming, the regulatory environment has evolved. Notably, Alibaba founder Jack Ma’s financial technology firm Ant Group faced regulatory scrutiny, resulting in the cancellation of its IPO in 2020 and subsequent rectification process supervised by regulators.
While regulatory concerns have posed challenges for Alibaba, the company has been grappling with other issues such as slow growth in the e-commerce sector in China and evolving consumer behavior. Despite these challenges, Alibaba exhibited early signs of recovery in the June quarter, with notable improvements in cloud computing revenue and transaction volumes on its e-commerce platforms. Looking ahead, Alibaba’s completion of the regulatory rectification process positions the company to pursue growth opportunities and strengthen its competitive position in the market.
Alibaba’s successful completion of the regulatory rectification process underscores the company’s commitment to regulatory compliance and operational excellence. This milestone marks a new chapter for Alibaba as it navigates regulatory challenges and strives to drive innovation in the evolving tech landscape in China.