How Alibaba ended up with a heavy fine in China
Since the end of last year, the Chinese government has decided to attack the tech giants that monopolize a big part of the economy in China. Jack Ma, co-founder of the Alibaba platform, has been prosecuted since December and has even been fined a record 2.78 billion dollars. Admittedly, the company's profits are high enough to shock.
Ant Group, Alibaba's online payment subsidiary
Ant Group, established in 2014, is a former spinoff of Alibaba, which remains the largest shareholder. The group manages Alibaba's financial services and online payments. In the first half of last year, the subsidiary announced a revenue of $11.08 billion, which is an increase of about 40% compared to the same period in 2019, not to mention the huge profits that amount to more than $34 million. The company was actually preparing to do an IPO before it was ordered by the Chinese government to retract it last November.
Alibaba's media assets
The Chinese government has also been combing through the tech giant's media assets. It should be remembered that Jack Ma acquired the South China Morning Post in 2016, and that he owns huge shares in the 36Kr, Bilibili and Weibo platforms, which are very popular with young Chinese people. The government felt that Jack Ma’s influence on Chinese media needed to be reduced.
The exclusivity requirement
Moreover, the Chinese government criticizes Alibaba for requiring exclusivity from merchants, who are therefore not allowed to advertise or sell their products on other marketplaces. This practice excludes competition and aims to monopolize and concentrate the whole economy to Alibaba. This is the main reason behind the huge fine that Jack Ma and Alibaba are facing.
Let’s notice that Alibaba is not the only giant in the Chinese government's line of fire. We can expect to see others at the helm in the coming months.