China’s record antitrust fine of $2.8 billion on Alibaba Group Holding Ltd. is the latest in a series of actions that have wiped more than $250 billion off Alibaba’s valuation since October. The unprecedented regulatory offensive against Alibaba is part of China’s broader regulatory push, triggered after Jack Ma’s insulting comments.
Ma had infamously rebuked “pawn shop” Chinese lenders, regulators who don’t get the internet, and the “old men” of the global banking community.
Beyond antitrust, government agencies are said to be scrutinizing other parts of Ma’s empire too. However, the action against the e-commerce giant sends a clear message to the country’s largest corporations and their leaders that anti-competitive behavior and remarks against the government will have consequences.
“The required corrective measures will likely limit Alibaba’s revenue growth as a further expansion in market share will be constrained,” Lina Choi, a senior vice president at Moody’s Investors Service, said in a note. “Investments to retain merchants and upgrade products and services will also reduce its profit margins.”
The Hangzhou-based firm “has escaped possible outcomes such as a forced breakup or divestment of assets. The penalty will not shake up its business model, either,” said Jet Deng, an antitrust lawyer the Beijing office of law firm Dentons.
Regardless, the government regulators are also reportedly concerned with Alibaba’s ability to sway public discourse in its favor and want the company to sell some of its media assets, including the South China Morning Post, Hong Kong’s leading English-language newspaper.