Record fine drags e-commerce giant Alibaba to rare loss
SHANGHAI: Chinese e-commerce giant Alibaba Group said it fell to a US$1.17 billion operational loss in its latest financial quarter due to a record fine levied by the government for anti-competitive practises.
The Hangzhou-based company was fined 18.2 billion yuan (US$2.78 billion) last month, as part of a push by regulators to rein in dominant digital platforms that have achieved unprecedented influence over the daily lives of hundreds of millions of Chinese consumers.
Alibaba said however that its business continued to post solid growth and that without the hole blown in its finances by the fine, it would have achieved an operating profit of US$1.6 billion in the January-March period, up 48 per cent.
Alibaba, Tencent, JD.com and other big tech players became hugely profitable on growing Chinese digital lifestyles, plus government restrictions on major US competitors in the domestic market.
But concern has risen over their influence in China, where tech-savvy consumers use them to communicate, shop, pay bills, book taxis, take out loans and a range of other daily tasks.
Alibaba has faced particular scrutiny after billionaire cofounder Jack Ma publicly criticised Chinese regulators in October for reining in a push into online lending, wealth management and insurance products by Alibaba’s online payments arm Ant Group.
The government said it imposed the fine over Alibaba’s practise of forbidding merchants who wish to sell their wares on its popular online marketplaces from simultaneously offering them on rival e-commerce sites, saying the company had “abused its dominant position in the market.”
Alibaba officials subsequently vowed to make operational adjustments to address the criticisms but have shrugged off any business impact.