Alibaba Group hit with record $2.8 billion fine amid increased government scrutiny of billionaire Jack Ma’s tech empire

Jack Ma Alibaba Founder China
Jack Ma, executive chairman of the Alibaba Group.

  • Alibaba Group has been hit with a record $2.8 billion fine in China.
  • Billionaire founder Jack Ma’s tech empire has come under increased scrutiny from regulators.
  • “Alibaba accepts the penalty with sincerity,” the company said in a statement.
  • See more stories on Insider’s business page.

China on Saturday fined Jack Ma’s Alibaba Group a record $2.8 billion for abusing its leading market position.

Alibaba Group said in a statement that the penalty came from the State Administration for Market Regulation, which had been investigating it since December.

The fine was yet another sign that Chinese regulators have taken a more critical stance towards the tech empire built by Ma, one of the country’s wealthiest moguls.

Speaking at a conference last fall, Ma made negative comments about international financial regulations. Chinese President Xi Jinping then reportedly halted a planned $37 billion initial public offering by Ant Group, another Ma company.

After the clash, Ma disappeared from public view for months. It was later reported by The Financial Times that he’d spent some of that time meeting with regulators.

The government on Saturday said Alibaba had used anti-competitive practices in its online retail market.

The fine was equal to about 4% of Alibaba’s annual sales in China, according to Xinhua News, a quasi-state media outlet. Local news reports said the company would be required for three years to complete “self-inspection” reports that it would then submit to the watchdog.

“Alibaba accepts the penalty with sincerity and will ensure its compliance with determination,” the company said Saturday in a press release.

It added: “To serve its responsibility to society, Alibaba will operate in accordance with the law with utmost diligence, continue to strengthen its compliance systems and build on growth through innovation.”

The company also published an open letter to customers, saying it had “fully cooperated” with the investigation.

“Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development,” the company said.

The 18 billion yuan fine was a record for China, surpassing the $975 million fine issued to Qualcomm in 2015, as Reuters reported at the time.

Alibaba will hold a conference call on Monday to discuss the penalty.

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Amtrak is being offered $80 billion for upgrades, as part of Biden’s infrastructure plan, but experts say modernizing America’s railways may cost far more

President Joe Biden boarding an Amtrak train with a mask on
President Joe Biden boards his train at Amtrak’s station in Pittsburgh.

  • As Amtrak readies a spending spree, experts say it may cost more to modernize the US system.
  • Biden last week announced $80 billion in Amtrak funding as part of his $2 trillion plan.
  • See more stories on Insider’s business page.

As President Joe Biden last week outlined the $80 billion in funding for Amtrak in his $2 trillion infrastructure package, the railway operator published a map showing all the changes it plans to make in the next 14 years.

There were high-profile new routes to Las Vegas and Phoenix in the west, and Nashville and Montgomery in the south. But experts said the most important part of the plan was the modernization of routes already in place – the ones that have been crumbling for years.

There are few who wouldn’t acknowledge that the country’s railways, both Amtrak and local ones, have fallen on hard times. The US is consistently ranked lower than other countries on its rail infrastructure. China, Japan, and other countries invested in high-speed trains in the last decades that are more efficient than anything in the US.

The most notable high-speed rail project in the US, for example, a train expected to connect San Francisco and Los Angeles, has repeatedly had its budget trimmed. That route was included in the map released by Amtrak this week, which detailed what it expected US routes to look like by 2035.

Amtrak Connect US Map 2021 March
Amtrak Connects US, the railway’s vision for train travel in the US in 2035.

The US hasn’t historically put as much funding into its rail system as its European or Asian counterparts, said Allan Zarembski, a professor and director of the Railroad Engineering and Safety Program at the University of Delaware.

“This bill will certainly help – but may not be enough by itself, since it does not address the long-term issue of ongoing funding for public passenger systems,” Zarembski said on Thursday.

Biden’s plan is certain to face opposition from conservatives in congress. Senator Mitch McConnell and Rep. Kevin McCarthy both said last week that the bill was full of wasteful spending.

The bill “[f]ast-tracks $80 billion in new subsidies for Amtrak and its unions, even though Congress provided billions in aid to Amtrak last year,” McCarthy said in a statement denouncing “Bidenomics.”

McConnell said Biden’s plan was full of “sweeping far-left priorities.”

Amtrak New Jersey Tunnel Project
Amtrak workers perform tunnel repairs to a partially flooded train track bed, Saturday, March 20, 2021, in Weehawken, N.J. With a new rail tunnel into New York years away at best, Amtrak is embarking on an aggressive and expensive program to fix a 110-year-old tunnel in the interim.

Over the years, academics and researchers have published a range of reports on the US rail system, most of which came to the same conclusion: More funding would be needed to modernize them to the new global standard.

A team of researchers at George Mason University, for example, in 2019 published an analysis of trains in the Northeast US, compared with their counterparts around the world.

To make the Northeast Corridor between Washington, DC, and New York City as reliable, energy-efficient, and safe as French Alstom trains, Amtrak would have to invest $164 million per mile, the researchers wrote.

That would total $37 billion for a single US route, which wouldn’t include its yearly operating cost of $570 million. That would be almost half the spending allocated as part of Biden’s bill.

Comparing country-to-country rail networks is a difficult task, in part because good systems are dependent on geographies. Even within the US, the rail corridors have varied uses. Commuters pile into the Acela in the northeast corridor, while site-seers relax in the glass-roofed cars that wind through Glacier National Park in the northwest.

But most of the US railway routes were “legacy” systems created by 19th-century railroads that went bankrupt, said Murray Rowden, global head of infrastructure at Turner & Townsend, a New York firm.

There’s a growing investment gap between what states are willing to pay and what the railways need. A plan like Biden’s can start to make up for those budget shortfalls.

“States always have their ups and downs with their budget cycles when trying to balance their priorities, with the main focus for most transit agencies being to their infrastructure in a ‘state of good repair,'” Rowden added.

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Facebook and Google are funding two new undersea internet cables running from the West Coast to Singapore and Indonesia

Google Curie undersea cable
The new Facebook and Google cable joins the companies’ other cable projects, like Google’s Curie cable, pictured being laid here.

  • Facebook and Google announced plans to fund two new transpacific internet cables.
  • The cables, called Bifrost and Echo, will link the US West Coast with Indonesia and Singapore.
  • Both Facebook and Google have been forced to abandon cable projects linking the US and Hong Kong.
  • See more stories on Insider’s business page.

Facebook and Google are pouring more money into internet cables that could span the Pacific Ocean.

The tech giants announced Monday they’re funding two new cables called Bifrost and Echo. The cables will link America’s west coast with Indonesia and Singapore, with a stop-over in Guam, the US island territory in the western Pacific.

Facebook is investing in both cables, while Google is only funding Echo.

In a press release on Monday, Facebook said the cables would increase transpacific internet capacity by 70%. CNBC reported Echo was slated to be completed by late 2023, and Bifrost by late 2024.

Facebook and Google are partnering with Indonesian companies Telin and XL Axiata, as well as Singaporean company Keppel.

Read more: We identified the 195 most powerful people at Google under CEO Sundar Pichai. Explore our exclusive org chart.

This comes after both Facebook and Google have abandoned plans to lay transpacific cables linking the US and Hong Kong.

Facebook announced on March 10 it was withdrawing from a plan called the Hong Kong-Americas (HKA) project, following political pressure from the US government.

In September 2020, a joint Facebook and Google cable project was abandoned because of the Trump administration’s national security concerns around laying cables to China. In the same month, Facebook deserted a project to link San Francisco with Hong Kong.

Facebook is currently also working on a project laying an enormous undersea cable around the African continent, while Google is working on cables linking the US with Europe, as well as Europe with the west coast of Africa.

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HSBC has closed its main office in Hong Kong after an outbreak of COVID-19 at a gym

A worker wearing PPE guards the entrance of HSBC bank main Hong Kong office after it was closed until further notice after three people tested positive for Covid-19 amid a recent wave of infections among the citys business and expatriate community in Hong Kong on March 17, 2021.
A worker wearing PPE guards the entrance of HSBC bank main Hong Kong office after it was closed until further notice after three people tested positive for Covid-19 amid a recent wave of infections among the city’s business and expatriate community in Hong Kong on March 17, 2021.

  • HSBC has temporarily shut its main Hong Kong office after three workers tested positive for COVID-19.
  • There has been a wave of infections in the city following an outbreak at a local gym.
  • In an internal memo seen by Bloomberg, HSBC said the bank can reopen when staff have been tested.
  • See more stories on Insider’s business page.

HSBC closed its main office in Hong Kong until further notice on Tuesday after three people working there tested positive for COVID-19.

The region’s Centre for Health Protection (CHP) published a formal notice asking people who spent more than two hours in the building between March 3 and 16 to be tested at a government-approved center by March 19, according to an internal memo HSBC sent to staff on Wednesday seen by Bloomberg.

The new infections followed a COVID-19 outbreak last Thursday at a gym in Sai Ying Pun, which has spread to the region’s financial district.

The CHP said Tuesday it was investigating 18 additional confirmed infections of the virus, taking the total number of cases in Hong Kong to date to 11,340.

The CHP also extended the current social distancing measures until March 31.

“It is our understanding that HMB can return to normal business when virus testing of colleagues and deep cleaning of the facility are complete,” HSBC said in the memo. “The exact timing is yet to be confirmed.”

Around 30,000 HSBC employees now have no access to the lender’s flagship office, located at 1 Queen’s Road Central, in the center of Hong Kong’s business district.

Guards wearing masks, face shields and protective clothing were standing in front of the building’s entrances and a poster stuck on the door told customers to visit another HSBC branch in the local area, Bloomberg reported.

Insider approached HSBC for comment but did not immediately receive a reply.

A spokeswoman from the bank told Bloomberg that HSBC was following advice from health authorities and taking the necessary steps so the building can reopen when it’s safe.

“For banking services, we have well-developed contingency measures that ensure our services and critical processes continue to be maintained,” she said.

Hong Kong, with a population of 7.5 million, has kept coronavirus cases low thanks to strict contact tracing, testing and quarantine measures. There have been 203 deaths in the city, according to the CHP data.

With a total of 292 cases between March 2 to March 15, the latest outbreak is the second largest since a surge in November.

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