Alibaba shrugs off record $2.8bn fine

BEIJING: Shares in tech giant Alibaba Group climbed more than 6% yesterday as the e-commerce titan reassured investors that a record $2.78 billion antitrust fine imposed by China would have little impact on its operations.

However, concerns that officials had not finished with a crackdown on the sector weighed on big-name firms including Tencent and JD.com.

Regulators slammed Alibaba with the penalty on Saturday after a monthslong probe concluded it had been abusing its dominant market position.

But in a conference call to investors yesterday, Alibaba’s board put a positive spin on the regulatory blow saying it appeared to be the end of the investigation, with chairman Daniel Zhang saying the fine would not have a “negative impact” on business operations.

The sanction comes as the government cracks down on major Chinese tech platforms — and Alibaba in particular — over allegations of anticompetitive behaviour and misuse of consumer data.

“We had good guidance on some of the specific issues under the antimonopoly law and I would say that we are pleased that we are able to put this matter behind us,” company vice-chair Joe Tsai added.

Alibaba will introduce measures to lower entry barriers and business costs faced by merchants on its shopping platform.

The firm’s stock price jumped nearly 9% to as high as HK$237.60 in Hong Kong in the morning before easing back marginally to close up 6.5%.

“Alibaba’s stock has rallied as the fine wasn’t as bad as it could have been,” said OANDA’s Jeffrey Halley. “However, it is the thought that counts, and investors seem concerned that Alibaba will not be the last China tech giant in the fine firing line.”

Alibaba has faced special scrutiny after co-founder Jack Ma publicly criticised Chinese regulators in October as being stuck in the past after they expressed growing concern over the push into online lending, wealth management and insurance products by the company’s online-payments arm, Ant Group.

“We have continuous communication with the regulators,” Zhang said, adding that the group would “fully comply” with the requirements.

The probe, which began in December, centred on Alibaba’s practice of forbidding merchants who wish to sell their wares on its popular online marketplaces from simultaneously offering them on rival e-commerce sites, the State Administration for Market Regulation said on imposing the fine on Saturday.

Lina Choi from Moody’s Investors Service warned that the required changes would likely limit Alibaba’s revenue growth in the future and hinder attempts to grab more market share.

“Investments to retain merchants and upgrade products and services will also reduce its profit margins,” she said.