Alibaba’s legal woes look far from over

China’s top e-commerce firm Alibaba was hit with a $2.75bn fine for antitrust violations. But this may not be the end of the matter, with regulators expressing concerns about its non-core businesses.

Jack Ma plays guitar
(Image credit: © TR/AFP via Getty Images)

Shares in China’s top e-commerce firm Alibaba jumped by 10% after it received a $2.75bn fine for antitrust violations, says Callum Jones in The Times. Officials “could have fined the company more than twice that amount”. The antitrust probe concerned claims that the firm “abused its market dominance” by forcing merchants “to choose between doing business on its platforms and others”. It was launched just after Alibaba’s founder Jack Ma (pictured) vanished from public view for months last autumn after criticising the Chinese government.

Investors clearly think the fine is a price worth paying for Alibaba to put its legal woes behind it, especially since it is only “about 4% of domestic sales in 2019” says Lex in the Financial Times. But this may not be the end of the matter. Regulators have “voiced concerns” about Alibaba’s non-core businesses. What’s more, to remain in Beijing’s “good books”, Alibaba will have to spend more on “corporate good deeds... that support small businesses in rural regions”, lowering profits.

US giants such as Amazon should take note, says Gina Chon on Breakingviews. The fine shows that “it’s possible to define the market and single out data usage in ways that US regulators haven’t yet managed to do, but could”. Third-party merchants say Amazon “unfairly competes” against them when it “sells its own products using information gleaned from its platform”. Still, for now Amazon’s position seems secure, since US courts tend to be relaxed about such behaviour if it enhances “consumer welfare” by keeping prices low.

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Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

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