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  • Alibaba is one of the world's largest technology and e-commerce companies
  • An investor group lawsuit against Alibaba for monopolistic practices was filed in 2020
  • Chinese e-commerce giant Alibaba announced on Friday that it had agreed to pay USD 433.5 million
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Alibaba
The cheap website has a lot of trouble. Screenshot

Alibaba is one of the world's largest technology and e-commerce companies

Founded in China in 1999 by Jack Ma. It started as a digital marketplace to connect small and medium-sized businesses with buyers, but eventually expanded to a global scale. Today, Alibaba operates many businesses, including online commerce, payment services, cloud storage, logistics and entertainment.

In many areas, such as e-commerce or cloud storage, Alibaba remains one of the key market leaders. Despite its success, the company has repeatedly come under the scrutiny of regulators for its potential market power and compliance with competition rules.

An investor group lawsuit against Alibaba for monopolistic practices was filed in 2020

In it, the investors alleged that the company may have violated competition and monopoly laws by requiring merchants to choose only one trading platform to sell their products. According to the claimants, such requirements could have restricted competition in the market and given Alibaba an unfair advantage over other e-commerce players, which the investors considered detrimental to their investments.

The applicants alleged that, as a result of these actions, the company failed to disclose true information about the legality of its actions, possibly misleading the market and investors. These allegations covered the period from 13 November 2019 to 23 December 2020, when the price of Alibaba's American Depositary Shares fell following public reports of the company's suspected monopolistic behavior.

Investors in the lawsuit sought to recover damages, and if the case had continued, the maximum amount of damages claimed could have been as high as USD 11.63 billion.

Chinese e-commerce giant Alibaba announced on Friday that it had agreed to pay USD 433.5 million

to end a US class action lawsuit in which investors accuse the company of monopolistic practices. Although Alibaba denies the allegations and says it operates based on fair competition principles and has not violated monopoly laws, the company decided to settle the case to avoid additional legal costs and disruption to its business operations, Reuters reports.

This proposed settlement has been filed in Manhattan federal court and is subject to approval by US District Judge George Daniels. The lawsuit, filed in 2020, accused Alibaba of requiring merchants to choose only one distribution platform, which, according to the plaintiffs, could have monopolistic characteristics and violate fair competition principles.

The settlement terms apply to investors who purchased Alibaba's American Depositary Shares between 13 November 2019 and 23 December 2020, and cover losses they suffered when Alibaba's potentially misleading statements were disclosed to the market and the company's share price fell.

Plaintiffs' lawyers described the settlement to the court as a "remarkable result", noting that the settlement amount far exceeds the median recovery in similar investor class actions, where losses amounted to more than USD 10 billion.