EU fines AliExpress €550 million over illegal goods controls

The European Commission has fined AliExpress €550 million, about $630 million or £467 million, after finding that Alibaba’s consumer marketplace failed to do enough to limit illegal and counterfeit goods sold through its service. The penalty is the largest issued so far under the Digital Services Act, moving the EU’s platform enforcement from warnings into material financial consequences.

AliExpress is Alibaba’s consumer-facing e-commerce brand, separate from the parent company’s business-to-business operations. Brussels warned the company last year that it was falling short on illegal product controls and on the way its recommendation systems could amplify products that should not be available on the platform. The Commission said it set out required fixes at the time.

A year later, the regulator said AliExpress had not made sufficient changes. According to the Commission, AliExpress failed to properly assess whether it had enough staff reviewing potentially illegal goods. It also said the company did not adequately examine how its recommender and advertising systems could contribute to the spread of illegal products.

The Commission listed four additional findings:

• AliExpress’ systems for identifying illegal products were not functioning properly.
• The marketplace did not properly apply its penalty policy against traders selling illegal goods.
• Product compliance checks could be bypassed by placing items in the wrong category.
• The company did not do enough to stop counterfeit products from circulating on the platform.

The size of the fine also signals restraint by the Commission, at least relative to the law’s ceiling. The Digital Services Act allows penalties of up to 6% of global turnover. Alibaba Group reported annual revenue of $148 billion for the year ended March 31, which would put the theoretical maximum close to $9 billion. The Commission said it considered factors in AliExpress’ favor, including the fact that the Digital Services Act is new.

The case lands as Europe applies more pressure to low-cost cross-border e-commerce from China. Recent customs fees were aimed at cheap single-item imports, a model associated with marketplaces and retailers including AliExpress, Temu and Shein. European policymakers have argued that the flow of very low-priced parcels can bring unsafe or illegal products into the bloc while competing with local retailers that face higher compliance and operating costs.

Brussels has also suggested that new fees could push e-commerce companies to change logistics, including shipping goods in bulk to warehouses inside the European Union. That would give regulators and customs authorities more direct points of control than millions of individual parcels arriving from outside the bloc.

For marketplace operators, the AliExpress penalty is a reminder that DSA compliance is being judged beyond notice-and-takedown mechanics. The Commission is scrutinizing staffing, enforcement against sellers, product categorization and the role of recommendation and ad systems. Those are operating-model questions, not only legal-policy questions, and the cost of weak answers is now visible.

This story draws on original reporting from The Register.