Alibaba thanks Chinese regulators for imposing record $2.8 billion fine

After China imposed a record antitrust fine on Alibaba Group Holding Ltd., the e-commerce giant did an unusual thing: It thanked regulators.

Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development,” the company said in an open letter. “For this, we are full of gratitude and respect.” It’s a sign of how odd China’s crackdown on the power of big tech has been compared with the rest of the world. Mark Zuckerberg and Tim Cook would likely not express such public gratitude if the U.S. government were to hit Facebook Inc. or Apple Inc. with record antitrust fines.

Almost everything about China’s regulatory push is out of the ordinary. Beijing regulators wrapped up their landmark probe in just four months, compared with the years that such investigations take in the U.S. or Europe. They sent a clear message to the country’s largest corporations and their leaders that anti-competitive behavior will have consequences.

For Alibaba, the $2.8 billion fine was less severe than many feared and helps lift a cloud of uncertainty hanging over founder Jack Ma’s internet empire. The 18.2 billion yuan penalty was based on just 4% of the internet giant’s 2019 domestic revenue, regulators said. While that’s triple the previous high of almost $1 billion that U.S. chipmaker Qualcomm Inc. handed over in 2015, it’s far less than the maximum 10% allowed under Chinese law. Alibaba’s shares rose 5.5% Monday morning in Hong Kong.

“We’re happy to get the matter behind us,” Joseph Tsai, co-founder and vice chairman, said on an investor call on Monday. “These regulatory actions are undertaken to ensure fair competition.” The fine came with a plethora of “rectifications” that Alibaba will have to put in place — such as curtailing the practice of forcing merchants to choose between Alibaba or a competing platform — many of which the company had already pledged to establish. But Tsai said regulators won’t impose radical changes to its e-commerce strategy.

“They’re affirming our business model,” he said. “This kind of model is good for the growth of the country’s economy and helps innovation.”

He said the company is unaware of any other antitrust investigations into the company, except for a previously discussed probe into acquisitions and investments by Alibaba and other tech giants.

Alibaba Chief Executive Officer Daniel Zhang on Saturday declared his company now ready to move on from its ordeal, while China’s Communist Party mouthpiece People’s Daily issued assurances that Beijing wasn’t trying to stifle the sector.

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 at the Beijing office of law firm Dentons.