Alibaba has recently completed a three-year regulatory “rectification” process after receiving an antitrust fine in 2021. China’s market regulator, the State Administration for Market Regulation (SAMR), announced on Friday that Alibaba has successfully become compliant with antitrust regulations. This news has resulted in 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. The focus of the regulator was on Alibaba’s “choose one” policy, which forced merchants to select between two e-commerce platforms rather than being able to work with both. The SAMR believed that this policy, along with others, allowed Alibaba to strengthen its market position and gain unfair competitive advantages.
Since receiving the antitrust fine, Alibaba has been under the supervision of the SAMR to ensure compliance with regulatory requirements. The SAMR has now confirmed that Alibaba has completed the necessary rectification work and has ceased its “‘choose one of two’ monopoly behavior.” The regulator stated that it will continue to guide Alibaba to further improve its compliance, efficiency, and innovation processes.
The conclusion of the regulatory overhaul marks a positive development for Alibaba, according to analysts at Jefferies. They believe that this signifies a new beginning for the company and highlights its commitment to operations compliance. However, this announcement may also indicate a shift in the stance of Chinese regulators towards private technology firms, following a crackdown that began in late 2020.
Alibaba, like many other technology firms in China, has faced regulatory challenges that have impacted its stock performance. The company’s stock has fallen more than 70% from its peak in 2020 due to regulatory concerns and slow growth in the e-commerce sector. Despite these challenges, Alibaba has shown signs of recovery in the June quarter, with reaccelerated cloud computing revenue and healthy transaction volumes on its e-commerce platforms.
The completion of Alibaba’s regulatory process signifies a potential new beginning for the company. By addressing regulatory concerns and focusing on compliance and innovation, Alibaba aims to rebuild investor confidence and continue its growth trajectory in the highly competitive Chinese technology market.
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