The reason is that stores are restricted from selling products on other e-commerce platforms.
At the end of last year, after investigating the monopoly formed by Alibaba through its own market advantages, the State Administration for Market Regulation of China earlier determined that Alibaba had a market monopoly since 2015, so it ordered a fine of $2.8 Billion and asked Alibaba to stop.
For related monopolistic behaviors, in the next three years, a self-examination report must be submitted to the State Administration for Market Regulation of China to ensure that no monopolistic situation arises.
The General Administration of Market Supervision of China determined that the reason for Alibaba’s market monopoly was that Alibaba required that stores selling goods on Tmall not sell goods on other e-commerce platforms.
This caused the continuous growth of its e-commerce platform but relatively hindered store arrivals. The development of other e-commerce platforms also prevents competitors from gaining more stores.
Although many stores will avoid circumvention in other ways to sell products on more e-commerce platforms, in the eyes of China’s General Administration of Market Regulation, they believe that Alibaba’s actions affect fair competition in the market, and they believe that it forms a monopoly.
In fact, in addition to investigating Alibaba, the State Administration for Market Regulation also informed the e-commerce platform service providers such as Tencent, JD.com, Pinduoduo, Meituan, Didi, etc. that they are required not to use their platform scale advantages to influence market competition.
On the one hand, it also requires the protection of consumer privacy rights and the elimination of the sale of counterfeit goods.
After being punished, Alibaba said it would make improvements and lower the operating threshold and cost of its e-commerce platform so that its e-commerce platform can be used by more stores and promote positive economic circulation.