Two days after Chinese regulators fined e-commerce giant Alibaba $ 2.8 billion for illegally restricting sellers on its shopping sites, the company announced the fees for these merchants and invest in new services for them.
“We will incur additional costs,” said Alibaba’s managing director Daniel Zhang on Monday during a conference call with analysts. “We don’t see this as a one-off cost. We see this as a necessary investment so that our dealers can work better on our platform. “
The company’s chief financial officer, Maggie Wu, said Alibaba has allocated “billion” renminbi in additional annual spending to support this initiative, but has not provided details. One US dollar is 6.6 renminbi.
China’s antitrust fine against Alibaba far exceeds previous fines for anti-competitive business practices. This reflects the government’s growing concern about the ability of internet giants to improve the playing field against their rivals and take advantage of their consumers.
In Alibaba’s case, authorities focused on the company’s practice of preventing vendors from selling their goods on competing websites. Mr. Zhang said Monday that such exclusivity agreements previously only covered a few digital storefronts operated by major brands on Tmall, Alibaba’s high-end platform.
Mr. Zhang said Alibaba did not expect the end of such agreements to have “material negative effects” on the company’s business. And Alibaba Executive Vice Chairman Joseph C. Tsai was optimistic about what Beijing’s increasing scrutiny of large digital platforms will mean for China’s internet industry.
“The communication from regulators to the public is very clear that they reinforce our business model,” said Tsai. “We feel very comfortable that there is nothing wrong with the basic business model of a platform company. These regulatory measures are taken to ensure fair competition for the benefit of the public. “
“We are happy that we can put this matter behind us,” he said.