TMTPost -- Hong Kong-traded shares of Alibaba Group jumped as much as 3.8% before settling 3% higher Friday. The American depositary receipts (ADRs) of Alibaba closed nearly 2.9% higher. Shares of the e-commerce heavyweight rallied after Chinese market regulator announced conclusion of a three-year antitrust rectification.
Credit：Xinhua News Agency
Following the regulatory guidance, Alibaba has fully ceased its monopolistic practices through its 「choose one」 policy and has taken significant steps to regulate its business practices, fulfill its responsibilities as a platform, improve its compliance management systems and services for merchants and consumers on the platform, according to a statement of the State Administration for Market Regulation (SAMR) Friday.
SAMR said the regulatory rectification of Alibaba originated from its administrative punishment three years go. In April 2021, the Chinese antitrust watchdog hit Alibaba with a RMB18.23 billion yuan (US$2.6 billion) fine in its anti-monopoly investigation of the tech giant, stating it abused its market dominance. The fine was made during an anti-monopoly investigation opened in December 2020. The probe focused on Alibaba』s choose one policy, which forced merchants to choose sellings on its platforms or those of its competitors, rather than being able to work with both.
In a statement in April 2021, SAMR said the choose one policy stifles competition in China』s online retail market and infringes on the businesses of merchants on the platforms and the legitimate rights and interests of consumers. Besides the fine, the regulator also asked Alibaba to file self-examination and compliance reports for three years in a row. Alibaba then responded it would comply with the regulatory determination and was fully cooperated with the investigation, conducted a self-assessment and already implemented improvements to its internal systems.
Over the past three-year, SAMR has strengthened its supervision of Alibaba's compliance rectification, conducted in-depth inspections on the implementation of rectification, and commissioned third-party assessments to evaluate the effectiveness of the company』s compliance efforts, according to the statement Friday. SAMR concluded that Alibaba』s rectification work has achieved good results as the online retail market environment has improved, the fair competition order has been effectively restored, the market has been continuously further developed, the competition between online platforms has been significantly fostered, and the quality of platform economic development and the business environment have been continuously optimized.
As to the following steps, SAMR said it will guide Alibaba to continue to regulate its operations, further improve quality and efficiency of compliance, accelerate innovation-driven development, continuously improve services, and support for building it into a world-class company as well as enhancing international competitiveness.
In response to SAMR』s announcement, Alibaba said the end of rectification marks 「a new beginning」 for the company. 「In the future, we will continue to focus on innovation, adhere to compliant operations, increase investment in science and technology, promote the healthy development of the platform economy, and create more value for society,」 the company said.
The retulator』s endorsement seems as an positive signal of Beijing』s ongoing softening stance towards private technology firms amid sluggish economic recovery. These weeks, Alibaba and its rivals reported sales miss in the second quarter of the year,raising concerns about the Chinese economy.
Alibaba posted deeper-than-expected slowdown in revenue. Its revenue grew 4% year-over-year (YoY) to RMB243.24 billion, slowing from a 7% year-over-year (YoY) increase in the preceding quarter.Net income attributed to ordinary shareholders slumped 27% YoY to RMB24.27 billion, less than analysts』 expectation of RMB26.91 billion following a 86% YoY decrease in the quarter ended March. Alibaba』s bread and butter Taobao and Tmall Group, which includes two major online marketplaces, generated RMB113.37 billion in the June quarter, below the RMB121.70 billion that analysts estimated, surprisingly recorded a 1% YoY fall in revenue compared with a 4% YoY rise three months ago.