AliExpress fined record €550m by EU for failing to stop sale of illegal and fake goods

AliExpress, the Chinese online retail platform, has been fined a record €550 million by the European Union for failing to prevent the sale of illegal and harmful goods on its marketplace. The penalty, announced by the European Commission, marks the largest fine ever issued under the Digital Services Act (DSA), which took effect in 2024 to safeguard consumers against deceptive practices and unsafe products. The fine stems from the EU's findings that AliExpress did not adequately monitor or remove illegal items from its platform. These included counterfeit clothing, unsafe toys, and potentially hazardous cosmetics and kitchenware. According to the commission, the platform lacked sufficient personnel to evaluate the legality of products, often allowing only tens of seconds for assessment before approval. Many illegal goods were also promoted through AliExpress’s recommendation algorithms, and internal risk assessments proved ineffective. As a result, numerous harmful products remained accessible to buyers for extended periods. The European Commission emphasized that the scale of the platform does not absolve it from responsibility. Henna Virkkunen, the commission’s executive vice-president for tech sovereignty, security, and democracy, stated that the presence of counterfeit and dangerous goods online is not an inevitable consequence of e-commerce but rather a failure to meet legal obligations. She called on AliExpress to take immediate corrective actions. This fine surpasses previous penalties under the DSA, which included €200 million levied against Temu and €120 million against X. However, it represents less than 1% of the €122 billion in annual revenue generated by AliExpress’s parent company, Alibaba. The maximum possible fine under the DSA would have been 6% of global revenue, though the exact calculation remains unclear. The EU’s investigation revealed widespread non-compliance among products listed on major retail platforms. A prior study found that 65% of cosmetics, 63% of food supplements, and 60% of personal protective equipment sold on these platforms were non-compliant with EU regulations. This context underscores the broader challenge faced by regulators in ensuring consumer safety in the digital marketplace. AliExpress responded swiftly, calling the fine “disproportionate.” The company argued that its existing frameworks and recent improvements were not adequately recognized by the commission. It expressed disagreement with the ruling and indicated it would review the decision and consider all available options. The European Commission clarified that the fine was not based solely on the presence of illegal products but rather on the platform’s failure to establish effective safeguards. Despite being given over two years to improve its compliance and risk management processes, AliExpress did not meet the required standards. The commission noted that while the platform’s terms of service appeared to align with EU law, they allowed sellers to list non-compliant goods with ease. Internal testing conducted by the commission uncovered extensive violations, even as AliExpress claimed to operate within the EU’s “safety gate” mechanism designed to quickly identify and block illegal content. This discrepancy highlights ongoing challenges in enforcing digital regulations across global platforms.