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   Technology StocksAlibaba Group Holding Limited


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From: Glenn Petersen4/10/2021 6:28:55 AM
2 Recommendations   of 789
 
China slaps Alibaba with $2.8 billion fine in anti-monopoly probe

PUBLISHED FRI, APR 9 20219:53 PM EDT
UPDATED FRI, APR 9 202111:55 PM EDT
Christine Wang @CHRISTIIINEEEE
CNBC.com

KEY POINTS

-- Chinese regulators hit Alibaba with a 18.23 billion yuan ($2.8 billion) fine in its anti-monopoly investigation of the tech giant, saying it abused its market dominance.

-- The probe’s main focus was a practice that forces merchants to choose one of two platforms, rather than being able to work with both.

--The company said in a statement it accepted the penalty and will comply with the regulator’s determination.

Chinese regulators hit Alibaba with a 18.23 billion yuan ($2.8 billion) fine in its anti-monopoly investigation of the tech giant, saying it abused its market dominance.

Regulators opened a probe into the company’s monopolistic practices in December. The investigation’s main focus was a practice that forces merchants to choose one of two platforms, rather than being able to work with both.

In a Saturday statement, China’s State Administration for Market Regulation (SAMR) said this 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,” according to a CNBC translation of a Chinese-language statement.

The government said that “choose one” policy and others allowed Alibaba to bolster its position in the market and gain unfair competitive advantages.

In addition to the fine, which amounts to about 4% of the company’s 2019 revenue, regulators said Alibaba will have to file self-examination and compliance reports to the SAMR for three years.

The company said in a statement it accepted the penalty and will comply with the SAMR’s determination. Alibaba said it fully cooperated with the investigation, conducted a self-assessment and already implemented improvements to its internal systems.

“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.

The company added it will hold a conference call on Monday at 8 a.m. Hong Kong time to discuss the fine.

The announcement is the latest development in China’s crackdown on its technology companies. Regulators have been increasingly concerned about the power of China’s tech giants, particularly those who operate in the financial sector.

Much of that heightened scrutiny has sharpened around the business empire of billionaire Jack Ma, who founded both Alibaba and Ant Group.

Ant’s highly anticipated initial public offering was abruptly suspended in November shortly after Chinese regulators published new draft rules on online micro-lending, a key part of the company’s business. The China Securities Regulatory Commission also summoned Ma and other Ant execs ahead of that announcement.

Ma appeared to come under fire for comments that were critical of China’s financial regulator, saying the country’s financial system was “the legacy of the Industrial Age.”

After the Ant IPO was suspended, Ma dropped out of the spotlight, fueling speculation over his whereabouts. In January, the eccentric billionaire briefly reappeared in a video as part of one of his charity foundation’s initiatives.

Ant has since committed to listing and said it would help employees monetize shares.

— CNBC’s Arjun Kharpal, Evelyn Cheng and Eunice Yoon contributed to this report.

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To: Glenn Petersen who wrote (758)4/10/2021 11:21:56 AM
From: Sr K
   of 789
 
WSJ coverage is similar

Alibaba Hit With Record $2.8 Billion Antitrust Fine in China

Penalty comes amid regulatory scrutiny on business empire of Alibaba founder Jack Ma


Alibaba Group is being fined a record amount following an antitrust investigation by Chinese authorities.PHOTO: THOMAS PETER/REUTERS

By
Keith Zhai

Updated April 10, 2021 1:22 am ET

China’s antitrust regulator imposed a fine equivalent to $2.8 billion against Alibaba Group Holding Ltd. for abusing its dominant position over rivals and merchants on its e-commerce platforms, a record penalty in the country that comes amid a wave of scrutiny on the business empire of company founder Jack Ma.

China’s State Administration for Market Regulation said Saturday in Beijing that Alibaba punished certain merchants who sold goods both on Alibaba and on rival platforms, a practice that it dubbed “er xuan yi”—literally, “choose one out of two.”

As part of the penalty, regulators will require that Alibaba carry out a comprehensive revamp of its operations and submit a “self-examination compliance report” within the next three years, they said. The 18.2 billion yuan fine is equivalent to 4% of the company’s domestic annual sales, the regulator added. Under Chinese rules, antitrust fines are capped at 10% of a company’s annual sales.

Alibaba’s business practices limited competition, affected innovation, infringed on the rights of merchants and harmed the interests of consumers, the regulator said.

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To: Sr K who wrote (759)4/12/2021 6:15:59 AM
From: Glenn Petersen
   of 789
 
Alibaba shares rise 6% in U.S. premarket trading after $2.8 billion anti-monopoly fine

PUBLISHED SUN, APR 11 20219:52 PM EDT
UPDATED MON, APR 12 20214:32 AM EDT
Arjun Kharpal @ARJUNKHARPAL
CNBC.com

KEY POINTS

-- Alibaba was fined 18.23 billion yuan ($2.8 billion) by Chinese regulators as a result of an anti-monopoly investigation.

-- Alibaba shares rose 6% in premarket trading in the U.S. following a 6.5% rally in Hong Kong.

-- Alibaba CEO Daniel Zhang said he does not expect a material impact on the company from the change of this exclusivity arrangement.

GUANGZHOU, China — Alibaba shares rose 6% in premarket trading in the U.S. after the company was fined 18.23 billion yuan ($2.8 billion) by Chinese regulators as a result of an anti-monopoly investigation.

Alibaba’s Hong Kong-listed shares closed 6.5% higher on Monday.

“Despite the record fine amount, we think this should lift a major overhang on BABA and shift the market’s focus back to fundamentals,” Morgan Stanley wrote in a note on Sunday, a day after the fine was issued.

Chinese regulators opened an anti-monopoly probe into Alibaba in December. The main focus was around a practice that forces merchants to list their products on one of two e-commerce platforms, rather than choosing both.

China’s State Administration for Market Regulation (SAMR) said on a Saturday that this practice 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.”

Alibaba CEO Daniel Zhang said he does not expect a material impact on the company from the change of this exclusivity arrangement.

Zhang also said Alibaba will introduce new measures to lower the entry barriers and costs for businesses and merchants on the platform. The company will also continue to expand to smaller Chinese cities and rural areas, the CEO added.

China’s technology companies have grown, largely unencumbered, into giants. But Beijing is becoming increasingly concerned by the power of these firms.

Regulatory scrutiny has focused on Alibaba founder Jack Ma’s empire after the billionaire made some comments in October that appeared critical of China’s financial regulator.

Not long after, regulators pulled the plug on what would have been a record-setting initial public offering of Ant Group, the financial technology giant Ma founded.

Joe Tsai, the executive vice chairman of Alibaba, said on Monday he is not aware of any more investigations regarding the anti-monopoly law.

“We are pleased that we are able to put this matter behind us,” Tsai said.

But Tsai said that Alibaba and its peers are subject to inquiries from regulators on mergers, acquisitions and strategic investments as part of a review process.

In addition to the fine, which amounts to about 4% of the company’s 2019 revenue, regulators said Alibaba will have to file self-examination and compliance reports to the SAMR for three years.

CNBC’s Christine Wang contributed to this report.

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From: Glenn Petersen4/12/2021 8:14:25 AM
   of 789
 
Jack Ma’s Ant Group to become financial holding company under a Beijing-enforced revamp

PUBLISHED MON, APR 12 20217:41 AM EDT
UPDATED MON, APR 12 20217:52 AM EDT
Reuters

KEY POINTS

-- Jack Ma’s Ant Group will restructure as a financial holding company, China’s central bank said on Monday.

--The fintech giant’s $37 billion IPO was derailed by risk-wary regulators days before it was due to list in November.

-- The overhaul comes two days after e-commerce giant Alibaba, of which Ant is an affiliate, was hit with a $2.75 billion antitrust penalty as China tightens controls on the “platform economy.”

China’s Ant Group, the fintech giant whose $37 billion initial public offering was derailed by risk-wary regulators days before it was due to list in November, will restructure as a financial holding company, the country’s central bank said on Monday.

The overhaul comes two days after e-commerce giant Alibaba, of which Ant is an affiliate, was hit with a $2.75 billion antitrust penalty as China tightens controls on the “platform economy.”

Under terms of the settlement, Ant will restructure as a financial holding company, a move that, along with other restrictions announced on Monday, is expected to curb its profitability and valuation.

“Ant Group attaches great importance to the seriousness of the rectification,” the company said in a statement, adding it planned to set up a personal credit reporting business and to fold its two flagship lending businesses into its consumer finance company.

The People’s Bank of China said that under a “comprehensive and feasible restructuring plan,” Ant would cut the “improper” linkage between payments service AliPay, virtual credit card business Jiebei and consumer loan unit Huabei.

The central bank also asked Ant to break its “monopoly on information and strictly comply with the requirements of credit information business regulation.”

The company, part of the sprawling business empire founded by billionaire Jack Ma, agreed to improve corporate governance and “rectify illegal financial activities in credit, insurance and wealth management,” the central bank said.

The central bank said it had also asked Ant to control its leverage and product risks, and control the liquidity risk of its flagship fund products and to “actively lower” the size of its massive Yu’eBao money market fund.

The measures “set an example” for financial regulation of the platform economy,” the state-backed Economic Daily newspaper said in a Monday commentary.

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To: Glenn Petersen who wrote (761)4/12/2021 9:15:18 AM
From: The Ox
   of 789
 
These items are major positives for BABA. The main uncertainty has been removed and that should help them rebound over time, IMO.

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To: The Ox who wrote (762)4/12/2021 9:23:09 AM
From: Glenn Petersen
1 Recommendation   of 789
 
Agreed. The dollar amount of the settlement was inconsequential. The fact that they settled was the important news. There will be no appeal, of course. Hard to imagine Alphabet, Facebook and Amazon going down without a fight.

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To: Glenn Petersen who wrote (763)4/12/2021 9:29:26 AM
From: The Ox
1 Recommendation   of 789
 
Forward PE under 20 makes this look extremely attractive. Especially in light of the expectations for over 30% growth in revenues the next couple of years.

We'll see....

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From: Sr K4/12/2021 1:20:00 PM
1 Recommendation   of 789
 
WSJ

Jack Ma’s Ant Group Bows to Beijing With Company Overhaul

China’s central bank said Ant will apply to become a financial holding company, subjecting it to regulations similar to those governing banks

What Happened to China's Superstar Entrepreneur Jack Ma



After Jack Ma criticized Chinese regulators, Beijing scuttled the initial public offering of his fintech giant Ant and he largely disappeared from public view. WSJ looks at recent videos of the billionaire to show how he got himself into trouble.

By
Jing Yang

Updated April 12, 2021 8:23 am ET

Ant Group Co., the financial-technology giant controlled by billionaire Jack Ma, will apply to become a financial holding company overseen by China’s central bank, overhauling its business to adapt to a new era of tighter regulation for internet companies.

In a statement, the People’s Bank of China said Ant representatives were summoned to a meeting Monday with four regulatory agencies that also included the country’s banking, securities and foreign-exchange overseers. It said a “comprehensive, viable rectification plan” for Ant has been formulated under the regulators’ supervision over the past few months.

The directive follows an intense regulatory assault on Mr. Ma’s business empire that began with the suspension of the company’s blockbuster initial public offering in November. Ant had been on track to sell more than $34 billion worth of stock and list on stock exchanges in Hong Kong and Shanghai, when Beijing pulled the plug on the dealafter Mr. Ma criticized financial regulators in a public speech.

In January, The Wall Street Journal reported that Ant was planning to fall fully in line with China’s financial regulations by turning itself into a financial holding company, essentially subjecting Ant to regulations similar to those governing banks.

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From: Glenn Petersen4/17/2021 2:59:29 PM
   of 789
 
EXCLUSIVE China’s Ant explores ways for Jack Ma to exit

Julie Zhu
Reuters
5 minutes read
April 17, 2021
Ant explores ways for Jack Ma to exit -sources

Ant Group is exploring options for founder Jack Ma to divest his stake in the financial technology giant and give up control, as meetings with Chinese regulators signaled to the company that the move could help draw a line under Beijing’s scrutiny of its business, according to a source familiar with regulators’ thinking and two people with close ties to the company.

Reuters is for the first time reporting details of the latest round of meetings and the discussions about the future of Ma’s control of Ant, exercised through a complicated structure of investment vehicles. The Wall Street Journal previously reported that Ma had offered in a November meeting with regulators to hand over parts of Ant to the Chinese government.

Officials from the central bank, People’s Bank of China (PBOC), and financial regulator China Banking and Insurance Regulatory Commission (CBIRC) held talks between January and March with Ma and Ant separately, where the possibility of the tycoon’s exit from the company was discussed, according to accounts provided by the source familiar with the regulators’ thinking and one of the sources with close ties to the company.

Ant denied that a divestment of Ma's stake was ever under consideration. "Divestment of Mr. Ma's stake in Ant Group has never been the subject of discussions with anyone," an Ant spokesman said in a statement.

Reuters could not determine whether Ant and Ma would proceed with a divestment option, and if so, which one. The company hoped Ma's stake, which is worth billions of dollars, could be sold to existing investors in Ant or its e-commerce affiliate Alibaba Group Holding Ltd without involving any external entity, one of the sources with company ties said.

But the second source also with company connections said that during discussions with regulators, Ma was told that he would not be allowed to sell his stake to any entity or individual close to him, and would instead have to exit completely. Another option would be to transfer his stake to a Chinese investor affiliated with the state, the source said.

Any move would need Beijing's approval, both sources with knowledge of the company's thinking said.

The accounts provided by all the three sources are consistent in terms of the timeline for how discussions have evolved over the past few months. On the company side, one source said Ma met regulators more than once before the Chinese New Year, which was in early February. And the second source said Ant started working on options for Ma's possible exit about a couple of months ago. The source familiar with the regulators' thinking said Ant had told officials during a meeting sometime before mid-March that it was working on options.

The source familiar with the regulators' thinking has direct knowledge of conversations between Ant and officials, while one of the sources with company ties has been briefed on Ma's interactions with regulators and Ant's plans. The other one has direct knowledge of Ant's discussions about options. They requested anonymity because of the sensitivity of the situation.

The Ant spokesman did not provide any comments from Ma. Alibaba referred questions to Ant. Jack Ma's office did not respond to Reuters' request for comment made via Ant. The State Council Information Office, PBOC, and CBIRC, also did not respond to requests for comment.

The high-stakes discussions come amid a revamp of Ant and a broader regulatory clampdown on China's technology sector that was set in motion after Ma's public criticism of regulators in a speech in October last year.

Ma's exit could help clear the way for Ant to revive plans to go public, which stalled after the tycoon's speech, both sources proximate to the company said. Ant, which was about to raise an estimated $37 billion in what would have been the world's largest initial public offering, aborted plans the day after Ma's Nov. 2 meeting with regulators.

'TOO BIG FOR THEIR BRITCHES'

Since then Beijing has unleashed a series of investigations and new regulations that have not only reined in Ma's empire but also swept across the country's technology sector, including other high-profile, billionaire entrepreneurs.

For Ma, 56, who also founded Alibaba and once commanded cult-like reverence in China, the consequences have been particularly severe. The tycoon completely withdrew from the public eye for about three months and has continued to keep a low profile after a brief January appearance.

China’s antitrust regulator fined Alibaba a record $2.75 billion on April 10 following an antimonopoly probe that found it had abused its dominant market position for several years. A couple of days later Ant was asked by the central bank to become a financial holding company, bringing it under the ambit of banking rules that it had managed to avoid so far and allowed it to grow rapidly.

"China still likes to promote its technology firms as global leaders just as long as they don't get too big for their britches," said Andrew Collier, managing director of Orient Capital Research.

CONTROLLING STAKE

Although Ma had previously stepped down from corporate positions, he retains effective control over Ant and significant influence over Alibaba.

While he only owns a 10% stake in Ant, Ma exercises control over the company through related entities, according to Ant's IPO prospectus.

Hangzhou Yunbo, an investment vehicle for Ma, has control over two other entities that own a combined 50.5% stake of Ant, the prospectus shows. Yunbo can decide all matters related to Ant and exercise the combined voting power of the three entities, the prospectus shows.

Ma holds a 34% equity interest in Yunbo, the prospectus shows.

One of the sources with company ties said there's "a big chance" Ma would sell his equity interest in Yunbo to exit from Ant, ultimately paving the way for the fintech major to move closer to completing its revamp and reviving its listing.

Reuters could not reach Yunbo for comment. Ant did not

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From: Glenn Petersen5/14/2021 4:11:39 AM
   of 789
 
Alibaba Posts First Loss Since Going Public After Antitrust Fine

Chinese e-commerce company says it will invest future profits into warding off competition

By Stephanie Yang and Jing Yang
Wall Street Journal
Updated May 13, 2021 10:05 pm ET

Alibaba Group Holding Ltd. BABA -6.28% posted its first-ever quarterly loss since it went public after being hit by a record antitrust fine in China and pledged to invest future profits into improving its business and warding off competition.

Over the past year, the Chinese e-commerce company has been under pressure from both encroaching competitors and an antitrust investigation, which ruled that Alibaba had abused its dominant market position. In a Thursday earnings call, Chief Executive Daniel Zhang said the company would focus on bettering its platform following the fine.

“We have gone through all kinds of challenges including the Covid-19 pandemic, fierce competition as well as the antimonopoly investigation and the penalty decision by Chinese regulators,” Mr. Zhang said. “We believe the best way to overcome these challenges is to look forward and invest for the long term.”

Mr. Zhang said any profits this fiscal year that surpassed last year’s figure would go toward areas including improving user growth and engagement, merchant support, infrastructure and logistics.

For the quarter ended in March, Alibaba’s net loss attributable to ordinary shareholders was 5.5 billion yuan, equivalent to $836 million, compared with a net income of 3.2 billion yuan in the same period a year earlier. Its sales rose 64% to 187.4 billion yuan, equivalent to about $28.6 billion, beating analyst expectations.

In April, China’s State Administration for Market Regulation levied a $2.8 billion fine against Alibaba, equal to 4% of the company’s domestic annual sales. The regulator said its investigation, launched in December, found that the company punished certain merchants who sold goods both on Alibaba and on rival platforms, a practice known as “er xuan yi”—literally, “choose one out of two.”

“We believe the self-reflection and adjustment we’ve made will help us to better serve our community of consumers, merchants and partners, and position us well in the future,” Mr. Zhang said.

Alibaba also has taken steps to court merchants, cutting fees and making it easier for them to open stores on its e-commerce platforms. Mr. Zhang said on Thursday that the company was working on additional measures to help vendors on its platform.

The announcement of Alibaba’s penalty marked the end of a period of uncertainty for the company and its investors, though Beijing officials have continued to take a hard-line stance against China’s technology giants and any potential regulatory infractions. Alibaba could also be forced to sell off its media assets, The Wall Street Journal previously reported.

In the current fiscal year, Alibaba, which went public on the New York Stock Exchange in 2014, expects its revenue to grow at least around 30% to more than 930 billion yuan, compared with the previous year’s growth of 41%.
Alibaba has striven to maintain market share in its core e-commerce business as new upstarts such as five-year-old Pinduoduo and popular short-video platforms have grown their own user bases. On Thursday, the company reported that annual active consumers at the end of March surpassed one billion, with 891 million of those in China.

Pinduoduo, which successfully drew in buyers through gamification and cheap deals, said earlier this year that it had edged past Alibaba in annual active consumers with 788 million at the end of 2020.

Alibaba has its own competing app Taobao Deals, offering lower-priced goods. On Thursday, the company said 70% of new active users came from less developed areas, signaling inroads in lower-tier cities and rural regions.

For Ant Group Co., Alibaba’s beleaguered financial-technology affiliate, profit grew about 41% for the quarter ended Dec. 31 from a year earlier despite regulatory scrutiny. Ant generated an estimated quarterly profit of 21.8 billion yuan, equivalent to $3.4 billion, based on the Journal’s calculations from Alibaba’s disclosures.

During the period, the Chinese government called off Ant’s blockbuster initial public offering that had been on track to be the world’s largest stock sale and subsequently ordered Ant to revamp its businesses.

Ant, which owns the popular payment and lifestyle app Alipay, has in recent months been coming to grips with a bevy of new regulations, including turning itself into a financial-holding company overseen by the central bank. The designation would subject Ant to rules similar to those governing banks and cloud the company’s growth prospects.

Alibaba owns a third of Ant and reports its share of profits from the online-payments company with a one-quarter lag. Company executives made no comment on Ant on Thursday’s call, the first after China’s central bank issued directives last month on how it wanted Ant to rectify its businesses.

Since Ant and Alibaba fell into Beijing’s regulatory crosshairs, the outspoken co-founder Jack Ma largely disappeared from public view, aside from a handful of video appearances. He resurfaced earlier this week at Alibaba’s Hangzhou headquarters to attend an annual corporate celebration known as AliDay.

—Matt Grossman contributed to this article.

Write to Stephanie Yang at stephanie.yang@wsj.com and Jing Yang at Jing.Yang@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the May 14, 2021, print edition as 'Alibaba Posts Loss After Fine.'

Alibaba Posts First Loss Since Going Public After Antitrust Fine - WSJ

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