EU Imposes Historic DSA Fine: Alibaba's AliExpress Fined €550 Million

The European Commission announced on Monday (20th) that Alibaba's (BABA-US)(09988-HK) cross-border e-commerce platform AliExpress has been fined €550 million (approximately $629 million) for violating the Digital Services Act (DSA) on content moderation and consumer safety. This is the highest penalty ever issued by the EU to a major online platform since the full implementation of the DSA.

According to EU investigations, AliExpress failed to effectively assess and reduce the spread of illegal, unsafe, and counterfeit products on its platform.

Regulators pointed out that the platform allowed counterfeit goods, unsafe toys, and dangerous cosmetics to remain online for weeks. Additionally, AliExpress's advertising and recommendation systems were accused of amplifying the spread of illegal goods, while its 'brand authorization' system for preventing counterfeits was criticized for being understaffed, ineffective, and easily circumvented by sellers.

The Commission criticized AliExpress for having penalty policies in place but failing to enforce them, allowing many non-compliant sellers to continue selling illegal goods on the platform.

Henna Virkkunen, the EU's technology chief, stated that with 193 million users in Europe, AliExpress's regulatory shortcomings not only pose risks to consumers but are also highly unfair to other businesses that comply with the rules.

This fine far exceeds previous penalties imposed on Elon Musk's X platform (€120 million) and another Chinese e-commerce giant, Temu (€200 million). Nevertheless, regulators stated that they considered the 'novelty' of DSA enforcement as a mitigating factor when calculating the fine; otherwise, it could have reached up to 6% of the company's global annual sales.

AliExpress must submit a remediation plan by October 20, outlining how it will improve its risk assessment and mitigation mechanisms. The EU will review this plan in December, and if it is still deemed non-compliant with DSA standards, AliExpress may face further fines.

As of now, Alibaba has not made any public response to the penalty.