Chinese online retailer AliExpress hit with €550m fine by EU regulators

AliExpress had 193m users in Europe last year

Chinese online retailer AliExpress owned by Alibaba has been hit with a record €550m fine from the European Union on Monday.

Chinese online retailer AliExpress owned by Alibaba has been hit with a record €550m fine from the European Union on Monday for failing to tackle sales of illegal, unsafe, and counterfeit products on its platform.

The fine was the third issued by the European Commission under the EU's landmark Digital Services Act (DSA), which requires very large online platforms to do more to counter illegal and harmful content.

The Commission charged AliExpress in June last year with failing to comply with a DSA requirement to assess and mitigate the risks of dissemination of illegal products.

It set an October 20 deadline for AliExpress to propose remedial measures, and the company could face further penalties if the regulator decides in December that they do not comply with the DSA.

"This is very dangerous for consumers, unfair for companies which are complying with all our rules," EU tech chief Henna Virkkunen told reporters.

She pointed to AliExpress's 193m users in Europe last year versus Shein's 156m and Temu's 130m. Temu has also been fined under the DSA and Shein is facing an ongoing investigation.

"One in five Europeans say they shop once a month from Shein, Temu, and AliExpress," Ms Virkkunen said.

AliExpress criticised the EU fine, saying it was excessive. "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," AliExpress said in an email.

"We are carefully reviewing the decision and considering all available options."

The Commission said that AliExpress had not properly evaluated whether it had enough people to review the risks and had overestimated the effectiveness of its system in detecting and removing illegal products.

The regulator criticised the company's recommender and advertising systems for exacerbating the spread of illegal products and its reliance on one quantitative indicator to measure its moderation system to prevent the risk of illegal products appearing or reappearing in similar forms.

It said the failure of AliExpress to detect illegal products meant that illegal products ranging from counterfeit products to unsafe toys and dangerous cosmetics remained online for many weeks.

The Commission also took issue with the company's ineffective penalty policy, which resulted in penalised businesses continuing to sell illegal products on its platform.

It said that the mandatory AliExpress "brand authorisation" system – intended to prevent counterfeit sales – was ineffective and understaffed and was easily circumvented by traders selling fake products.

The regulator said the novelty of the DSA was a mitigating factor in calculating the fine, which could have been higher.

The penalty is significantly higher than the €120m handed out to Elon Musk's social media platform X in December last year and the €200m Temu was fined last May, both for DSA violations.

AliExpress dodged a fine, which could be as much as 6% of its global annual turnover, in June last year after agreeing to measures to tackle the dissemination of potentially illegal and pornographic materials on its platform.

Reuters