A PYMNTS Company

Alibaba Completes Antitrust Overhaul, Marking End of Regulatory Scrutiny

By  |  September 1, 2024

Alibaba Group’s prolonged period of regulatory scrutiny has officially come to an end, marking a potential shift in the Chinese government’s stance toward the private sector. The State Administration for Market Regulation (SAMR) announced on Friday that the company’s three-year effort to rectify its monopolistic practices has successfully restored fair competition in the market, according to Asia Nikkei.

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    The SAMR emphasized that the completion of Alibaba’s rectification is a significant milestone, affirming that the regulator will now focus on providing “solid protection” to bolster the company’s international competitiveness. This move is seen as part of a broader strategy by Beijing to revitalize its slowing economy by supporting leading private enterprises.

    The conclusion of Alibaba’s regulatory overhaul follows a tumultuous period for the e-commerce giant, which began in 2021 when Beijing imposed a record 18 billion yuan ($2.5 billion) antitrust fine on the company. The fine was the result of an investigation that found Alibaba had been abusing its dominant market position for several years. The company was ordered to curtail its anticompetitive behavior and was required to submit compliance reports over a three-year period, a directive that has now been fulfilled.

    The regulatory crackdown on Alibaba was part of a broader campaign that began in late 2020, targeting China’s tech sector with unprecedented regulatory measures. This wave of enforcement led to a significant decline in the market, with Alibaba’s shares plunging by about 65% since the announcement of the penalty, per Reuters. The crackdown, which lasted for approximately 18 months, caused widespread concern among investors and triggered a massive stock sell-off in March 2022.

    Read more: Ant Group’s Jack Ma Cedes Control As China Pressures Big Tech

    However, recent developments suggest a softening in Beijing’s approach. Alibaba’s shares saw an increase of over 3% during early trading in New York on Friday, reflecting investor optimism following the conclusion of the regulatory process.

    In a statement, Alibaba described the end of the regulatory process as a “new starting point for development.” The company emphasized its commitment to innovation, compliance, and investment in technology, while also pledging to contribute to the healthy development of the platform economy and generate greater value for society.

    This week also marked a significant milestone for Alibaba with the official conversion of its secondary listing on the Hong Kong Stock Exchange to a primary listing. Effective Wednesday, this change allows Alibaba to maintain dual primary listings in both Hong Kong and New York. The move, which did not involve the issuance of new shares or any fundraising, makes the company eligible for inclusion in Hong Kong’s Stock Connect program, thereby enabling mainland Chinese investors to trade its shares.

    Alibaba’s business operations have been under intense scrutiny since late 2020, following critical remarks by its founder, Jack Ma, about Chinese financial regulators. His comments led to the abrupt suspension of a highly anticipated initial public offering (IPO) by Alibaba’s fintech subsidiary, Ant Group, further fueling the regulatory pressures faced by the company.

    Source: Asia Nikkei