AliExpress Fined €550 Million by EU for Failing to Prevent Illegal Products

The European Commission has fined AliExpress €550 million for failing to prevent the sale of illegal, unsafe, or counterfeit products. The penalty follows an investigation under the EU's Digital Services Act (DSA), which sets strict obligations for online platforms to assess and mitigate risks related to illegal content.

Key Highlights

• AliExpress fined €550 million by the European Commission for DSA violations.
• Investigation found ineffective systems for detecting and removing illegal products.
• AliExpress must submit an action plan by October 20 to address compliance issues.
• Brand authorization and compliance checks were found to be inadequate.

Details of the EU Investigation

AliExpress, a major Chinese e-commerce platform, was found to have overestimated the effectiveness of its systems for detecting and removing illegal products. According to the European Commission, the company relied on a single quantitative indicator that did not accurately measure how well its moderation system worked. As a result, many illegal products remained available on the platform for several weeks, even after detection.

The investigation also found that AliExpress did not properly enforce its penalty policy for traders selling illegal goods. Product compliance checks could be bypassed by sellers who mislabeled their products. The mandatory brand authorization system, designed to prevent counterfeit sales, was described as ineffective and understaffed. This allowed traders to bypass controls and continue selling counterfeit items.

Obligations Under the Digital Services Act

The Digital Services Act requires platforms like AliExpress to review and remove potentially illegal products. The Act also mandates that companies assess how their recommender and advertising systems might contribute to the spread of illegal goods. The European Commission found that AliExpress inadequately assessed these risks and did not take sufficient action to address them.

AliExpress now faces a deadline of October 20 to submit an action plan to the European Commission. This plan must outline specific measures to address the breaches identified and to improve risk assessment and mitigation. The European Board for Digital Services will review the plan within one month of receipt and provide its opinion. The Commission will then have another month to issue a final decision and set a reasonable timeline for AliExpress to implement the required changes.

Next Steps for AliExpress

The European Commission's decision highlights the importance of robust compliance systems for online platforms operating in the EU. AliExpress must now demonstrate that it can effectively detect and prevent the sale of illegal and counterfeit products. The outcome of this process will determine whether the company can continue to operate under the new regulatory framework without further penalties.