Alibaba stocks shows signs of rebounce back following the completion of its three-year regulatory overhaul

Alibaba has successfully completed a three-year regulatory overhaul following a significant antitrust fine imposed in 2021 for monopolistic practices, according to China’s market regulator. This completion marks a major milestone in Alibaba's compliance efforts.

In response, Alibaba's shares rose nearly 3% during Friday’s trading session.

The State Administration for Market Regulation (SAMR) of China announced on Friday that it had been closely monitoring Alibaba's compliance with antitrust regulations over the past few years. According to a statement translated from Google, the regulator noted that the rectification efforts had produced "good results."

In 2021, the SAMR fined Alibaba 18.23 billion yuan ($2.6 billion) as part of a broader anti-monopoly investigation. The focus was on Alibaba's practice of forcing merchants to choose between two e-commerce platforms, effectively restricting them from engaging with both. At the time, the SAMR criticized this "choose one" policy, arguing that it allowed Alibaba to strengthen its market position and gain unfair competitive advantages.

Since the imposition of the fine, the SAMR has been overseeing Alibaba's efforts to comply with regulatory requirements. As of Friday, Alibaba has completed this compliance process and has ceased its “choose one of two” monopoly behavior, according to the SAMR.

Looking ahead, the SAMR indicated that it will continue to guide Alibaba to enhance its compliance, improve operational efficiency, and accelerate innovation.

Concluding this regulatory overhaul helps Alibaba move past one of its most challenging encounters with Beijing. Analysts at Jefferies noted that the end of the regulatory process is a positive development for the company, highlighting a fresh start and ensuring operational compliance.

This announcement may also signal a softening stance from Chinese regulators toward private technology firms, following a stringent crackdown that began in late 2020. During that time, Beijing implemented a series of regulations aimed at curbing the power of domestic tech companies, with a focus on areas like antitrust and gaming.

Alibaba, founded by Jack Ma, has been under intense scrutiny since the aborted IPO of its affiliate, Ant Group, in 2020. Like Alibaba, Ant Group underwent a regulatory rectification process, with most major issues resolved by last year.

Regulatory pressures have weighed heavily on Alibaba’s stock, which has dropped over 70% from its peak in 2020. The company is also grappling with slow growth amid rising competition in China’s e-commerce sector and cautious spending by Chinese consumers.

Despite these challenges, Alibaba showed early signs of recovery in the June quarter, with a rebound in cloud computing revenue and strong transaction volumes on its e-commerce platforms.