The European Union has imposed a record €550 million ($630 million) fine on Alibaba-owned AliExpress for failing to prevent the sale of illegal and counterfeit products. The fine, announced this week, is the largest ever issued under the EU's Digital Services Act (DSA), which aims to enhance oversight of online platforms.
Key Details
EU regulators stated that AliExpress did not take adequate measures to curb the sale of prohibited goods, including toys and cosmetics. An investigation launched in March 2024 revealed that even after identifying illegal listings, many products remained available for weeks. Additionally, several items did not comply with the EU's stringent environmental and product safety regulations, according to the European Commission.
Henna Virkkunen, the EU's tech chief, emphasized the need for online marketplaces to systematically identify and address risks to consumer safety.
Today, we are holding AliExpress to this standard and request it to take action,
she said in a statement. The fine surpasses previous penalties under the DSA, including a €120 million fine against Elon Musk's social media platform X and a €200 million fine on Chinese retailer Temu.
Background
AliExpress has criticized the fine as "disproportionate" and stated that it does not reflect the improvements made to its compliance framework. The company is considering its options in response to the penalty. AliExpress remains the largest Chinese online marketplace in the EU, serving approximately 193 million users.
The significant fine could lead to increased scrutiny of e-commerce platforms, particularly those operating in the EU. Companies in the online retail sector may face higher compliance costs and regulatory pressures as authorities seek to enforce product safety standards more rigorously. Investors will watch for potential changes in regulatory frameworks affecting e-commerce operations in the EU.