EU fines AliExpress 550m euros under Digital Services Act

The European Commission fined AliExpress 550 million euros ($629 million) on Monday, the largest penalty imposed so far under the EU Digital Services Act, saying that the Alibaba-owned e-commerce platform had failed to adequately assess and mitigate the risks associated with the sale of illegal, unsafe, and counterfeit products.

The Commission claimed that AliExpress had underestimated the resources needed to review potentially illegal products, overstated the effectiveness of its moderation systems, and failed to properly assess how its recommendation and advertising systems could amplify the spread of illegal goods. It also concluded that the platform lacked effective mechanisms to detect counterfeit products, enforce penalties against offending sellers, and prevent merchants from circumventing product compliance checks through miscategorization.

The Commission ordered AliExpress to submit an action plan by Oct 20 outlining measures to remedy the breaches. Failure to comply could result in additional fines.

The European Commission announced the investigation into AliExpress in March 2024. It said that some commitments previously offered by AliExpress had already been accepted to address other concerns, leaving systemic risk assessment and mitigation as the remaining issues.

Henna Virkkunen, executive vice president for Tech Sovereignty, Security and Democracy, said the spread of counterfeit clothing, unsafe toys, dangerous cosmetics, and other illegal products "is not an unavoidable cost of shopping online", but rather "a failure by AliExpress to comply with its obligations under the DSA. She said the Commission was holding the platform to the standards required under the legislation and ordered it to take corrective action.

The AliExpress case marks the European Commission's third known fine under the Digital Services Act. Earlier this year, the Commission imposed a 120 million euro penalty on social media platform X, followed by a 200 million euro fine on Chinese online marketplace Temu over alleged failures to address systemic risks associated with illegal products.

AliExpress rejected the Commission's decision, describing the fine as disproportionate.

"We disagree with today's decision and the disproportionate fine, which does not adequately reflect our established framework and the significant, proactive enhancements we have made," the company said in a statement emailed to Reuters. It added that it was reviewing the decision and considering all available options.

Jian Junbo, deputy director of the Center for China-Europe Relations at Fudan University's Institute of International Studies, said the case underscores the European Union's increasingly stringent approach to digital regulation.

He said the bloc has made the DSA an important regulatory tool governing major digital platforms, noting that a number of large US technology companies have also faced investigations and penalties in recent years.

For AliExpress, the fine represents not only a financial penalty, but also a signal that compliance costs in the European market are likely to continue rising, Jian said. Companies seeking to expand in the EU will need to devote greater resources to monitoring products, strengthening compliance systems, and ensuring adherence to European rules.

At the same time, Jian questioned whether such intensive regulation ultimately benefits innovation. While strict enforcement may improve oversight, he said it could also increase compliance burdens for both foreign and European technology companies, potentially affecting their long-term growth and innovative capacity.