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Chinese e-commerce giant Alibaba Group said Thursday it fell to a $1.17 billion operational loss in its latest financial quarter due to a record fine levied by the government for anti-competitive practises.
The Hangzhou-based company was fined 18.2 billion yuan ($2.78 billion) last month, as part of a push by regulators to rein in dominant digital platforms that have achieved unprecedented influence over the daily lives of hundreds of millions of Chinese consumers.
Alibaba said however that its business continued to post solid growth and that without the hole blown in its finances by the fine, it would have achieved an operating profit of $1.6 billion in the January-March period, up 48 percent.
Alibaba, Tencent, JD.com and other big tech players became hugely profitable on growing Chinese digital lifestyles, plus government restrictions on major US competitors in the domestic market.
But concern has risen over their influence in China, where tech-savvy consumers use them to communicate, shop, pay bills, book taxis, take out loans and a range of other daily tasks.
Alibaba has faced particular scrutiny after billionaire co-founder Jack Ma publicly criticised Chinese regulators in October for reining in a push into online lending, wealth management and insurance products by Alibaba's online payments arm Ant Group.
The government said it imposed the fine over Alibaba's practise of forbidding merchants who wish to sell their wares on its popular online marketplaces from simultaneously offering them on rival e-commerce sites, saying the company had "abused its dominant position in the market."
- Concern over Big Tech -
Alibaba officials subsequently vowed to make operational adjustments to address the criticisms but have shrugged off any business impact.
In its Thursday earnings announcement, Alibaba said little about the affair, focusing instead on its otherwise solid business performance.
It said that in the full fiscal year ending March 31 its revenues grew 41 percent, though full-year operating profit was flat due to the fine.
In a statement accompanying the earnings, CEO Daniel Zhang said Alibaba would continue to "support our merchants and invest into new businesses and key strategic areas."
The Alibaba fine was a record and nearly three times the almost $1 billion levied by China against Qualcomm in 2015, Bloomberg said.
Even before the fine, the regulatory crackdown had cost Ma and Ant Group dearly.
A planned record-shattering $35 billion Hong Kong-Shanghai IPO by Ant Group, which would have added to Ma's already massive wealth, was abruptly shelved.
Ma subsequently disappeared from public view for weeks, and Ant Group was ordered by regulators to return to its roots as an online payment services provider.
The government crackdown has weighed on Alibaba shares as well as those of other major Chinese tech players amid fears that they also might face further fines and restrictions.
The Wall Street Journal reported earlier this year that Alibaba was also being pushed to shed wide-ranging media assets, including a potential sale of Hong Kong's South China Morning Post.
The Chinese government moves echo global concern over the increasing clout of Big Tech that has Facebook, Google and others also facing scrutiny at home and abroad.