Two days after Chinese regulators E-commerce giant Alibaba fined $ 2.8 billion to impose illegal restrictions on sellers on its shopping sites, the company said it would charge less from such merchants and invest in new services for them.
“We will incur additional costs,” Alibaba Chief Executive Daniel Zhang said during a conference call with analysts on Monday. “We do not see this as a one-time cost. We see this as a necessary investment to enable our merchants to operate better on our platform. “
The company’s chief financial officer Maggie Wu said Alibaba set aside “billions” of renminbi in additional annual expenses to support the initiative, but did not offer much specifics. A US dollar is around 6.6 renminbi.
China’s retaliatory punishment against Alibaba is higher than previous fines levied for anticomitic trade practices. It shows Government’s growing concern Regarding the ability of Internet giants to tilt the playing field against their rivals and take advantage of their consumers.
In Alibaba’s case, the authorities focused on the company’s practice to prevent sellers from selling their goods on competing sites. Mr. Zhang said on Monday that such an exclusivity arrangement would first cover only a few digital storefronts, driven by big brands on Alibaba’s high-end platform Tomall.
Mr Zhang said that Alibaba did not expect the end of the system to have any “material negative impact” on the company’s business. And Joseph C., the executive vice president of Alibaba. Tsai offered what it considers Beijing’s growing scrutiny of large digital platforms for China’s Internet industry.
Mr. Tsai said, “Communication to the public is very clear that they are confirming our business model.” “We feel very comfortable that there is nothing wrong with the fundamental business model of a platform company. These regulatory actions are taken to ensure fair competition to benefit the public. “
“We are happy that we are able to put this matter behind us,” he said.