Alibaba Secures Antitrust Endorsement, Marking a New Chapter

Alibaba Group Holding Ltd. has received a significant endorsement from China’s antitrust watchdog over three years after a landmark investigation into its online practices. This move signals Beijing’s growing support for the country’s leading internet companies and reflects a shift in regulatory tone.

Resolution of Antitrust Probe:

The State Administration for Market Regulation (SAMR) stated that Alibaba had ceased the monopolistic practices that triggered the probe, which began in 2020.

The e-commerce giant has stopped enforcing exclusive arrangements on merchants, enhanced services for shoppers, and fostered healthier competition among online platforms. Following the announcement, Alibaba’s shares saw a 4% rise in pre-market trading in New York.

Beijing’s Changing Stance Toward the Private Sector:

This endorsement aligns with the Chinese government’s recent efforts to bolster the private sector and technology industry amid economic challenges following the Covid-19 pandemic.

Over the past year, the regulatory approach has noticeably softened compared to the aggressive crackdowns of 2020 and 2021, which targeted various sectors, including ride-hailing, online education, and e-commerce.

The Impact of the Crackdown and Alibaba’s Future:

The SAMR’s investigation into Alibaba, launched in 2020, was part of a broader regulatory campaign to curb the power of China’s internet giants. The probe culminated in a record $2.8 billion fine against Alibaba for abusing its market dominance.

The agency has praised the “effective results” of Alibaba’s rectification efforts over the past three years and has committed to guiding the company, regulating its operations, and enhancing its compliance.

In response, Alibaba expressed optimism, stating, “This is a new beginning for Alibaba.” The company emphasized its commitment to innovation, compliance, and the healthy development of the platform economy, with a focus on creating value for society.

Ongoing Challenges in the Chinese Tech Industry:

Despite the regulatory endorsement, the aftereffects of the crackdown continue to linger. Funding for new startups has slowed as entrepreneurs and investors remain cautious about provoking further regulatory scrutiny. The tech industry has also been grappling with weakened consumer spending, a major concern as China’s economy struggles to recover.

In a recent warning to global markets, PDD Holdings Inc., the owner of the e-commerce platform Temu, provided an unusually pessimistic outlook, highlighting the industry’s challenges. PDD and Alibaba recently reported revenues that missed analysts’ expectations, reflecting the broader economic uncertainties in China.