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Alibaba’s Making Merchant Changes After $2.81B Antitrust Fine

Beijing’s anti-monopoly regulator has gotten serious about unfair business practices.

Regulators fined Alibaba Group 18.38 billion yuan ($2.81 billion) after finding that the Chinese tech and market platform firm essentially forced merchants to choose between doing business with it or a rival. The practice, referred to as merchant exclusivity, falls within the realm of unfair competition.

Alibaba said Monday it would lower the merchant barrier to entry and reduce business costs on its platforms.

Shares of Alibaba rose 8 percent in early trading Monday on the New York Stock Exchange to $241.21 a share, a sign that investors deemed the penalty to be less than initially feared.

Alibaba executive vice chairman Joe Tsai told investors that the company received “good guidance” on specific issues under China’s anti-monopoly law. He also indicated that past exclusivity arrangements past affected a small number of Tmall flagship stores. Alibaba does not expect to the changes ordered by regulators to materially impact its business.

Alibaba isn’t the only company facing antitrust scrutiny. The European Commission, Europe’s top antitrust watchdog, accused Amazon in November of violating competition laws by using “non-public business data of independent sellers who sell on its marketplace, to the benefit of Amazon’s own retail business, which directly competes with those third-party sellers.”

Meanwhile, though Tsai said he wasn’t aware of any other anti-monopoly probes, he indicated that regulatory bodies could be paying closer attention to Alibaba and its peers going forward.

In November, Alibaba scrapped a $34.5 billion initial public offering on the Shanghai and Hong Kong exchanges of its Ant Group division, which owns the popular mobile payments app Alipay, after Chinese officials raised antitrust concerns. Ant Group’s executive chairman last month didn’t rule out another run at an IPO down the road, but first Ant will have to resolve the regulatory issues.