AliExpress has been hit with a landmark €550 million ($629 million) penalty by European Union regulators, marking the largest fine ever imposed under the Digital Services Act (DSA). The e-commerce giant, owned by Alibaba Group, is accused of failing to adequately address the proliferation of illegal, unsafe, and counterfeit products on its platform.
European Commission Vice President Henna Virkkunen stated, “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.” The DSA, which specifically targets very large online platforms, mandates clear rules for digital services operating within the EU.
AliExpress has announced its intention to appeal the decision, labelling the fine as “disproportionate” and “excessive.” The company has until October 20 to submit a comprehensive plan detailing how it will rectify the identified breaches. Failure to satisfy regulators with this plan could result in further penalties. This action follows a previous agreement made by AliExpress a year ago to enhance controls on illicit items, including medicines and supplements. However, the Commission found these measures insufficient to address broader concerns.
Specific shortcomings cited by the Commission include AliExpress’s failure in some instances to penalise traders selling illegal products, allowing them to continue operations. The platform also reportedly lacked adequate staffing for effective review of potentially illegal listings, leading to excessive workloads for inspectors and hampering oversight. Furthermore, some illegal products were allegedly promoted or recommended before their removal.
In response, AliExpress asserted that the EU’s decision overlooks its “sound risk management framework and the significant, proactive enhancements” it has implemented. The company also claims to have collaborated with the Commission to meet its “evolving expectations.”
The DSA has become a significant regulatory tool for the EU in managing the operations of major online platforms. AliExpress boasts 193 million users in the bloc, surpassing competitors like Shein (156 million users) and Temu (130 million users). This enforcement action against AliExpress follows previous DSA penalties, including a €200 million fine for Temu in May and a fine for X (formerly Twitter) in December of the previous year. The implications of this substantial fine underscore the heightened scrutiny and compliance demands placed upon major online retailers operating within the European Union.
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