Alibaba Group Holding Ltd. has wrapped up a three-year regulatory overhaul, following significant changes made after being hit with an antitrust fine by China’s State Administration for Market Regulation (SAMR) in 2021. Consequently, Alibaba’s stock saw a boost, increasing by more than 3% during Friday morning trading.
In 2021, Alibaba was faced with a serious regulatory action when SAMR imposed a hefty fine of 18.23 billion yuan (around $2.6 billion) for monopolistic practices, particularly the “choose one” policy that prevented merchants from selling on multiple e-commerce platforms. This practice, according to SAMR, unfairly bolstered Alibaba’s dominance in the market.
Since the fine was imposed, SAMR has been closely monitoring Alibaba’s progress in complying with antitrust regulations. The regulatory body has now confirmed that Alibaba has met all required adjustments and effectively moved away from the monopolistic practices uncovered during the investigation.
“Alibaba has completed all rectification work as mandated by SAMR, achieving satisfactory outcomes,” said an SAMR representative. “We will continue to assist Alibaba in enhancing compliance, boosting operational efficiency, and encouraging innovation in their business strategies.”
This achievement signifies a critical transition for Alibaba, as it positions the company for a new phase of compliance and growth. Analysts from Jefferies have regarded this conclusion as a crucial point for Alibaba, indicating a fresh beginning that ensures compliance and transparency in its operations.
This regulatory resolution occurs amid a wider adjustment of China’s regulatory stance toward the tech sector, following comprehensive measures initiated in late 2020 to rein in the unchecked growth of tech conglomerates.
Signs of recovery for Alibaba are strong, with notable enhancements in its cloud computing revenue and e-commerce dealings. These advancements are vital as the company navigates a competitive e-commerce environment and caters to a more cautious Chinese consumer market.
The successful completion of Alibaba’s rectification process not only bolsters its regulatory status but also restores trust among investors and stakeholders, paving a stable path forward for the technology giant.
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