The encyclopedia · Legal & Compliance · Legal decision · 2021
Alibaba's 'choose one of two' practice cost it a record $2.75B antitrust fine
In 2021, SAMR fined Alibaba 18.2 billion yuan ($2.75B) for forcing merchants to sell exclusively on its platform — China's largest antitrust penalty.
Alibaba Group · 2021-04
What happened
Alibaba Group, China's largest e-commerce company, had long required merchants on its Tmall and Taobao platforms to sell exclusively on Alibaba — a practice known as 'choose one of two' (二选一). Merchants who also sold on competing platforms like JD.com or Pinduoduo faced penalties, reduced visibility or removal.
In April 2021, China's State Administration for Market Regulation fined Alibaba $2.75 billion (18.2 billion yuan), the largest antitrust penalty in Chinese history. The fine was 4% of Alibaba's 2019 domestic revenue. The regulator found that Alibaba had abused its dominant market position to stifle competition.
The fine came amid a broader wave of platform regulation in China that also included the suspension of Ant Group's IPO and Didi's forced delisting. Alibaba's stock fell sharply. The case signaled that even the largest platform companies are subject to antitrust enforcement — and that regulatory tolerance can shift faster than a business model can adapt.
Why it happened
- Alibaba forced merchants into exclusive selling arrangements, stifling competition from rival platforms.
- The practice was widespread and long-standing, but regulators tolerated it until enforcement priorities shifted.
- The $2.75B fine was part of a broader wave of antitrust enforcement against Chinese platform companies.
- Alibaba's market dominance made it the natural target for regulators seeking to signal a new era of oversight.
The lesson
Market dominance is not a right — regulators can redefine it as abuse at any time. In regulated markets, the law is only as fixed as the regulator's current priority.
Aftermath
Alibaba paid the fine and restructured its business practices. The case prompted other Chinese tech platforms to review their merchant agreements. The broader crackdown reshaped China's tech sector and prompted global investors to reassess regulatory risk in Chinese equities.
Sources
- Alibaba Group — Wikipedia (2021 antitrust fine)
- Alibaba accepts record China fine and vows to change — BBC News
- Alibaba: Chinese regulator slaps huge fine on tech giant — BBC News
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