EU fines AliExpress US$630 million over illegal products

The European Union has fined AliExpress $630 million for failing to prevent the sale of illegal products on its platform, marking the largest penalty ever issued under the Digital Services Act (DSA). The fine was announced on Monday after an investigation revealed that the online marketplace allowed the distribution of unsafe toys, non-compliant cosmetics, and counterfeit goods, despite having mechanisms in place to detect such violations. The EU accused AliExpress of not acting swiftly enough to remove these items once they were identified, with some remaining available for weeks even after detection. The investigation, which began in March 2024, uncovered that certain products sold on AliExpress did not meet the EU's stringent safety and environmental standards. These included items posing potential risks to consumer health and wellbeing. According to the EU, the company failed to implement adequate measures to identify and address these risks in a systematic manner. The enforcement action follows a series of similar penalties against other major digital platforms operating within the bloc. EU tech chief Henna Virkkunen stated in a press release that the fine serves as a clear message to all online marketplaces about their responsibility to protect consumers. “Risks must be identified and addressed systematically to ensure consumers can safely shop online. Today, we are holding AliExpress to this standard and requesting it to take action,” she said. The DSA, which came into effect in 2022, grants regulatory bodies significant power to enforce compliance among digital service providers, particularly those with large user bases. This is the highest fine levied under the DSA so far. In December of last year, Elon Musk’s social media platform X was fined €120 million for similar infractions related to content moderation failures. Earlier this year, the EU also imposed a €200 million penalty on e-commerce giant Temu for selling non-compliant products. These cases highlight the EU’s growing focus on ensuring that digital platforms adhere strictly to consumer protection laws and maintain high standards of product safety. AliExpress, which operates as a subsidiary of Chinese e-commerce giant Alibaba Group, has not yet publicly responded to the fine. However, the company has previously faced scrutiny over its practices in multiple jurisdictions. In recent years, regulators in various countries have raised concerns about the platform’s ability to monitor and control the vast array of products listed by third-party sellers. This latest fine underscores the increasing pressure on global e-commerce companies to comply with stricter regulations in different markets. The EU’s enforcement actions reflect a broader strategy to hold large technology firms accountable for their role in facilitating the sale of potentially harmful products. The DSA requires platforms to adopt proactive measures to detect and remove illegal content, including products that violate local laws and regulations. Failure to comply with these requirements results in hefty financial penalties designed to deter future misconduct. Regulators have emphasized that the goal of these enforcement actions is not merely punitive but also corrective. They aim to compel companies to invest in better systems for monitoring and managing the products sold through their platforms. As the digital economy continues to expand, the need for robust oversight becomes increasingly critical to safeguarding consumer interests and maintaining public trust in online shopping experiences. The fine against AliExpress is likely to prompt further regulatory reviews of other major e-commerce players operating within the EU. It also signals a shift toward more aggressive enforcement of existing legislation, with authorities prepared to impose substantial penalties to ensure compliance. Companies are being urged to review their internal policies and enhance their due diligence processes to avoid facing similar consequences in the future.