Alibaba Shares Surge As It Brushes Off Record Fine

Alibaba shares surged as much as eight percent in early trade in Hong Kong on Monday as the e-commerce giant brushed off a record 18.2 billion yuan fine levied by mainland regulators for abusing its dominant market position.

In a conference call with investors, top executives said the fine represented less than a fifth of the firm’s free cash flow, and that complying with orders to stop restricting merchants from using competitors’ platforms only affects a ‘small number’ of businesses.

“Today, all the merchants, they have these multi-platform strategies,” Alibaba CEO Daniel Zhang said. “So, businesswise, we don’t expect material negative impact on the change of this arrangement.”

The Jack Ma-founded e-commerce giant also pledged to introduce more measures to help merchants lower costs, now that it has a clearer idea on where the lines are drawn.

Executive vice chairman, Joe Tsai, reiterated to analysts during a conference call that Alibaba accepts the penalty with sincerity and doesn’t plan to appeal:

“With this penalty decision, we’ve received good guidance on some of the specific issues under the anti-monopoly law,” he said. “And I would say that we are pleased that we’re able to put this matter behind us.”

“We feel very comfortable that there’s nothing wrong with the fundamental business model of our platform company and these regulatory actions are undertaken to ensure fair competition in order to benefit the public.”

The State Administration for Market Regulation had levied the fine after concluding that Alibaba had abused its dominant position with an exclusivity arrangement with some vendors, which it concluded had harmed competition, innovation, and the interests of merchants and consumers.