Alibaba gains 4% in premarket trading after securing regulatory approval

Shares in Alibaba (NYSE:BABA ) climbed more than 4% in premarket trading Friday after the Chinese e-commerce and technology behemoth received approval from the country’s antitrust regulator over three years after a significant investigation into its online practices.

The State Administration for Market Regulation announced that Alibaba has ended the monopolistic behaviors that led to the investigation. According to the agency, the company has ceased enforcing exclusive agreements with merchants, enhanced services for consumers, and promoted competition among online platforms.

This official approval comes at a time when Beijing is increasingly voicing its support for private enterprises and the technology sector, a shift that has become more pronounced as the country struggles to recover from the economic downturn following COVID-19.

Since 2023, government officials have signaled a more lenient approach towards the private sector, in contrast to the heavy regulatory actions of 2020 and 2021, which targeted the influence of China’s internet giants and their billionaire founders.

The antitrust regulator praised the "effective results" of Alibaba's three-year rectification efforts on Friday, which were mandated when the company was fined. The regulator also stated it would continue to oversee Alibaba's operations, provide guidance, and assist in enhancing its compliance.

"This is a new beginning for Alibaba," the company said in a statement. "In the future, we will continue to focus on innovation, adhere to compliance, increase investment in technology, promote the healthy development of the platform economy, and create more value for society."

The antitrust investigation into Alibaba began in 2020 as part of a broader regulatory campaign that eventually extended to sectors such as ride-hailing, online education, and e-commerce. Less than a year later, Alibaba was hit with a record $2.8 billion fine after authorities determined it had abused its market dominance.

Source: Investing.com