Alibaba Settles Monopoly Allegations for $433.5 Million

Alibaba Group Holding Ltd (NYSE:BABA) has agreed to a settlement of $433.5 million to resolve a class action lawsuit filed by investors in the United States. The lawsuit accused the Chinese e-commerce giant of engaging in monopolistic practices. The settlement was announced on Friday and awaits approval from U.S. District Judge George Daniels.

The lawsuit, initiated in 2020, was based on claims that Alibaba forced merchants to be exclusive to its platform, thereby violating antitrust and unfair competition laws. The agreement aims to cover investors who purchased American depositary shares of Alibaba between November 13, 2019, and December 23, 2020. These investors alleged that they suffered losses due to the decline in the company’s stock price following what they considered misleading statements made by Alibaba.

Despite the settlement, Alibaba maintains that it did not engage in any wrongdoing. The decision to settle was made to avoid the costs and disruptions associated with a protracted lawsuit.

The plaintiffs' attorneys described the settlement as an “outstanding result” and emphasized that the amount significantly exceeds the average recovery in similar securities class action cases, where investor losses have surpassed $10 billion. If the lawsuit had proceeded, the maximum estimated damages that investors could have sought were projected to be $11.63 billion.

The case, known as In re Alibaba Group Holding Ltd Securities Litigation, is recorded under number 20-09568 in the U.S. District Court for the Southern District of New York. Judge Daniels' approval of the settlement will be the next step in the process, followed by informing affected investors about the outcome.