AliExpress Hit with $629 Million EU Fine for Illegal Products
AliExpress, owned by Alibaba, has incurred a substantial fine of $629 million imposed by the European Union. This penalty follows the discovery by regulators that the online marketplace did not adequately prevent the sale of illegal, unsafe, and counterfeit products. The penalty is the largest ever imposed under the EU’s Digital Services Act, indicating that European authorities are adopting a more stringent approach towards significant online platforms that do not adequately safeguard consumers. The European Commission stated that AliExpress failed to adequately evaluate and mitigate the risks linked to the sale of illegal goods on its platform. It also cautioned that the company may encounter further penalties later this year should it not execute adequate corrective measures.
The commission reported that its investigation revealed multiple deficiencies in AliExpress’s approach to identifying and addressing the risks linked to illegal products on its platform. It was determined that AliExpress did not sufficiently:
- Evaluate and address the potential dangers associated with the sale of illicit goods.
- Expeditiously eliminate unsafe and counterfeit items.
- Prevent sellers who have been banned or penalised from continuing to operate or returning to the platform.
- Allocate adequate personnel and resources to ensure compliance with its own regulations.
- Ensure that its content moderation systems effectively identified and eliminated illegal products.
Regulators have also expressed criticism towards the platform’s recommender and advertising systems, asserting that these mechanisms have enhanced the visibility of illegal products. Furthermore, the European Commission indicated that AliExpress depended on a singular quantitative metric to assess the efficacy of its moderation system, which proved insufficient in preventing the emergence or re-emergence of illegal products in analogous forms. “The spread of counterfeit clothing, unsafe toys, dangerous cosmetics and other illegal and harmful products is not an unavoidable cost of shopping online — it is a failure by AliExpress to comply with its obligations under the Digital Services Act,” Henna Virkkunen said in a statement.
The 629 million penalty is the largest ever issued under the Digital Services Act, which was introduced to enhance accountability among major online platforms for illegal content and products. It exceeds prior DSA penalties levied against other major platforms. Earlier this year, Temu faced a substantial penalty of nearly $232 million following the European Commission’s determination that it did not sufficiently evaluate and address the risks linked to illegal products available on its marketplace. In December of the previous year, X faced a penalty of approximately $140 million for violating the transparency regulations set forth by the DSA. This included misleading users via its paid blue checkmark system, deficiencies in its advertising repository, and a failure to grant researchers access to public data.
AliExpress stated that the fine was excessive and intends to appeal the decision. The company contended that it has markedly enhanced its risk management frameworks and has persistently collaborated with regulators during the investigation. It also stated its ongoing commitment to adhering to the DSA as regulatory expectations continue to develop. The European Commission has mandated that AliExpress submit a plan by October 20 detailing its approach to rectify the identified deficiencies. Regulators will subsequently evaluate whether the proposed measures align with the stipulations of the DSA. If the Commission concludes in December that AliExpress has not fully complied, the company may encounter additional financial penalties. The action also reflects the EU’s broader effort to tighten oversight of large digital platforms as online marketplaces continue to expand.
