EU Slaps $629 Million Penalty on AliExpress Under Digital Services Rules

On July 20, the European Union levied a record fine of €550 million ($629 million) against AliExpress, a subsidiary of Alibaba. The company's inaction in combating the sale of illicit, dangerous, and counterfeit goods on its platform led to a penalty. This was the third fine levied by the EU in accordance with the historic Digital Services Act.

Massive internet platforms are obligated to take further measures to combat unlawful and detrimental content according to the Service Act. The Commission levied charges against AliExpress in June of last year for noncompliance with a DSA obligation to evaluate and reduce the risks of the spread of illicit goods.

Orders from the EU to AliExpress

The European Union has given AliExpress until October 20 to suggest fixes. However, if the regulator finds that the firm has not complied with the DSA by December, additional fines may be imposed. Reporters were informed by EU tech chief Henna Virkkunen that this poses a significant risk to consumers and is unfair to companies that are following all of the EU's regulations.

Last year, AliExpress had 193 million European users, compared to 156 million for Shein and 130 million for Temu, she said. Shein is the subject of an ongoing investigation, while Temu has also been penalised under the DSA. According to Virkkunen, 20% of Europeans use online marketplaces like Shein, Temu, and AliExpress at least once a month. The Commission also voiced its disapproval of the company's ineffectual penalty policy, which allowed sanctioned companies to persist in selling illicit goods on the platform.

The report claimed that the AliExpress "brand authorisation" system, which is meant to stop the sale of counterfeit goods, was understaffed, couldn't stop traders selling phoney goods, and was ineffective overall.

Response from AliExpress

AliExpress felt the EU fine was too high and voiced their disapproval. According to an email from AliExpress, the company is not happy with today's judgement and the excessive penalties because it doesn't take into account the company's established framework and the proactive improvements it has made. The email went on to say that the corporation is taking the decision and all other possibilities very seriously.

According to ALIEXPRESS, the penalty is greater than the fines for X and TEMU. Regarding the question about AliExpress's risk assessment capabilities, the European Union stated that the company had not conducted a thorough evaluation. Additionally, it had falsely believed that its system could detect and remove illicit products. The advertising and recommender systems of the corporation were slammed by the regulator for making illicit products more widely available.

Also, the European Union has voiced concerns about the company's moderation mechanism and how it relies on a single quantitative indicator to keep illicit products from resurfacing or taking on new forms. AliExpress's inability to detect unlawful products allowed a wide variety of harmful and counterfeit goods, including toys and cosmetics, to stay online for weeks, according to the European Union.