Tag: fine

Alibaba accepts record fine

Source: BBC

Chinese tech giant Alibaba said on Monday that it accepted a record penalty imposed by the country’s anti-monopoly regulator.

Regulators slapped a $2.8bn fine after a probe determined that it had abused its market position for years.

The fine amounts to about 4% of the company’s 2019 domestic revenue.

Alibaba Group’s executive vice chairman Joe Tsai indicated that regulators have taken an interest in platforms like Alibaba as they grow in importance.

“We’re happy to get the matter behind us, but the tendency is that regulators will be keen to look at some of the areas where you might have unfair competition,” he told an investor call on Monday.

The company added that it was not aware of any further anti-monopoly investigations by Chinese regulators, though it signalled that Alibaba and its competitors would remain under review in China over mergers and acquisitions.

The main issue for regulators was that Alibaba restricted merchants from doing business or running promotions on rival platforms.

The company said it would introduce measures to lower entry barriers and business costs faced by merchants on e-commerce platforms.

“With this penalty decision we’ve received good guidance on some of the specific issues under the anti-monopoly law,” Mr Tsai said.

The group does not expect any material impact on its business from the change of exclusivity arrangements imposed by regulators.

The message from Alibaba today in its investor call was: we may be the biggest and the first Chinese tech firm to attract regulators’ attention – but we are by no means the last.

Alibaba executives sought to reassure investors that they are playing ball with the regulators. They’re going to make it cheaper for businesses to sell on their platform, and not force them to pick and choose between platforms – a practice seen by some in the industry as a case of “it’s my way or the highway”.

So far, Alibaba says, the discussions with regulators have been amicable, and the statement from the firm on accepting the penalty is markedly contrite.

It may also be heaving a sigh of relief. The 4% of 2019 revenue penalty is a record fine, but for Alibaba, which has a huge war chest, it’s a drop in the ocean.

But there will be more oversight and scrutiny of it and other firms.

The e-commerce giant indicated that while for now Alibaba is in the clear in terms of future investigations, the same could not be said for other firms in this sector.

Chinese tech firms are a powerful force in the country, and Beijing is keen to regulate them. Alibaba’s experience is a sign of more of the same to come.

The penalty is the latest in a chain of events targeting the company that kicked off last October, after its co-founder Jack Ma criticised regulators, suggesting they were stifling innovation.

Shortly after the speech, Chinese regulators scuppered the share market launch of Ant Group, which is Alibaba’s sister company and China’s biggest electronic payments provider.

However, some commentators noted that regulators had legitimate concerns about Ant Group’s consumer finance arm.

Ant Group was expected to be last year’s biggest share market launch on the Hong Kong exchange.

But Alibaba isn’t the only Chinese company to come under scrutiny by China’s increasingly assertive regulators.

Last month, China’s State Administration for Market Regulation (SAMR) said it had fined 12 companies over 10 deals that violated anti-monopoly rules.

The companies included Tencent, Baidu and Didi Chuxing – which are among China’s largest tech companies.

 

Dis-Chem fined R1.2m for hiking prices

By Sifiso Zulu for EWN 

The Competition Tribunal has found Dis-Chem pharmacies guilty of contravening the Competition Act by selling surgical face masks at excessive prices during the Covid-19 pandemic.

The retail group has been ordered to pay an administrative penalty of over R1 million.

Dis-Chem is alleged to have hiked the price by between 43% and 261%.

The tribunal said that the company abused its dominance when it hiked the prices.

Dis-Chem is appealing the ruling.

MTN fined R5m for hiking WhatApp bundle prices

By Kgomotso Modise for EWN 

The network has been slapped with a R5-million fine for failing to notify authorities in time before hiking the price of its 1GB monthly WhatsApp bundle.

MTN says it believes its penalty from Icasa in the 1GB monthly WhatsApp bundle case should be proportional to its transgression.

The network has been slapped with a R5 million fine for failing to notify authorities in time before hiking the price of its 1 gigabyte monthly WhatsApp bundle. At least R2 million of the fine is suspended for 3 years.

In a statement, MTN spokesperson Jacqui O’Sullivan details multiple instances where the network notified Icasa of its intentions to increase the price of its 1GB monthly WhatsApp bundle.

She said they also wrote to Icasa shortly before the price hike but there was no response and it went ahead with the adjustment.

MTN said it respected the role of the authority and insisted that, at the time, the company believed that increasing the price of the bundle was the only way to ensure the continued functionality of MTN SA’s 3G network.

The network said it was very aware of the required Icasa timing, which was why it applied for leniency.

MTN will be taking the decision on review to the High Court.

Source: BBC

Google has been hit with a €1.49bn (£1.28bn) fine from the EU for blocking rival online search advertisers.

It is the third EU fine for the search and advertising giant in two years.

The case accuses Google of abusing its market dominance by restricting third-party rivals from displaying search ads between 2006 and 2016.

In response, Google changed its AdSense contracts with large third parties, giving them more leeway to display competing search ads.

Google owner Alphabet makes large amounts of money from advertising – pre-tax profits reached $30.7bn (£23bn) in 2018, up from $12.66bn in 2017.

“Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anti-competitive contractual restrictions on third-party websites.

“This is illegal under EU anti-trust rules,” said EC commissioner Margrethe Vestager.

Last year, the EU competition authority hit Google with a record €4.34bn fine for using its popular Android mobile operating system to block rivals.

This followed a €2.42bn fine in 2017 for hindering rivals of shopping comparison websites.

The European Commission said that websites often had an embedded search function.

When a consumer uses this, the website delivers both search results and search adverts, which appear alongside the search result.

Google’s “AdSense for search” product delivers those adverts for website publishers.

The Commission described Google as acting like “an intermediary, like an advertising broker”.

In 2006, Google started to include “exclusivity clauses” in contracts which stopped publishers from placing ads from Google rivals such as Microsoft and Yahoo on search pages, the Commission said.

From 2009, Google started replacing the exclusivity clauses with “premium placement” clauses, which meant publishers had to keep the most profitable space on their search results pages for Google’s adverts and they had to request a minimum number of Google adverts.

Publishers also needed to get written permission from Google before making any changes to how rival ads were displayed, letting Google control “how attractive, and therefore clicked on, competing search adverts could be”, the Commission said.

Search giant
The restrictive clauses “led to a vicious circle”, Ms Vestager said in a media conference.

“Google’s rivals, they were unable to grow, and to compete, and as a result of that, website owners had limited options for selling advertising space on those websites, and were forced solely to rely on Google,” she said.

“There was no reason for Google to include these restrictive clauses in their contracts, except to keep rivals out of the market,” she added.

Between 2006 to 2016, Google had more than 70% of the search intermediation market in the EU. It generally had more than 90% of the search market and more than 75% of the online search advertising market, the Commission added.

By Jillian D’Onfro for CNBC

In response to the European Union’s $5 billion antitrust ruling in July, Google will change how it bundles its apps on Android phones and charge a licensing fee for phone makers that want to pre-install apps like Gmail, Maps and YouTube in the EU.

Google will also end restrictions on phone makers selling modified or “forked” versions of the mobile operating system.

Previously, Google tied together a suite of 11 different apps that phone makers would have to pre-install if they wanted to license its app store, Play. In July, the EU ruled that this bundling was anti-competitive — pushing consumers toward Google’s search engine and weakening rival app makers — though it only specifically called for Google to separate Chrome and Search from Play.

In response, Google said in a blog post on Tuesday that it will start offering separate licenses for Search and Chrome, as well as a license for its suite of apps like Maps, Gmail and Docs. That means that if phone makers want to pre-install those apps, they will have to pay a fee, though the amount was not specified. Google says the new licensing fee will offset revenue lost through compliance efforts that it uses to fund the development of Android, which it offers as a free, open source platform. The licenses for Search and Chrome will not have a fee.

Although Google doesn’t make money from Android directly, it generates advertising revenue through search as well as Chrome, Maps and Gmail, serving ads within those apps and using data it collects from users to better target ads across its platforms.

“Since the pre-installation of Google Search and Chrome together with our other apps helped us fund the development and free distribution of Android, we will introduce a new paid licensing agreement for smartphones and tablets shipped into the EEA [European Economic Area],” wrote Hiroshi Lockheimer, Google’s vice president of platforms.

Google’s previous agreements with phone makers also prevented them from selling modified versions of Android if they wanted to use its suite of apps, but the company will now allow manufacturers to build forked smartphones and tablets for the EEA.

Overall, Google’s Android powers more than 80 percent of the world’s smartphones. These changes, which will come into effect on Oct. 29, will only affect phones for the EEA, a group consisting of 28 EU countries, plus Iceland, Liechtenstein and Norway.

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