EU Imposes $629 Million Digital Services Act Fine on AliExpress

EU has imposed a historic €550 million ($629 million) fine on AliExpress for failing to adequately prevent the distribution of counterfeit, unsafe, and illegal merchandise. This financial penalty represents the third enforcement action executed by the European Commission under the Digital Services Act (DSA), a regulatory framework that mandates stringent oversight of digital content and consumer safety by major online platforms. The current enforcement stems from charges formalized in June of last year, which cited the company's failure to adequately evaluate and mitigate the hazards associated with illicit product listings. AliExpress has been given an October 20 deadline to submit compliance and remedial strategies, with the risk of encountering additional regulatory penalties in December should those measures be deemed insufficient.

EU technology chief Henna Virkkunen emphasized the risk to consumer safety and the competitive disadvantage faced by compliant businesses, highlighting the expansive reach of Chinese e-commerce platforms within the single market. AliExpress maintained an active user base of 193 million in Europe last year, surpassing competitors Shein and Temu, which recorded 156 million and 130 million users respectively. Regulators noted that a significant portion of European consumers frequently utilize these platforms, which has intensified scrutiny across the sector. Both Temu and Shein are undergoing parallel regulatory challenges under the DSA, with the former having received a €200 million fine in May and the latter remaining subject to an active investigation.

The European Commission’s findings revealed deep institutional failures within AliExpress's internal monitoring mechanisms. The regulator concluded that the platform lacked adequate human resources dedicated to risk mitigation and had significantly overstated the capabilities of its automated detection systems. Furthermore, the platform's recommendation and advertising algorithms were found to have inadvertently accelerated the visibility of illicit merchandise, while its reliance on a singular metric failed to prevent the recurrence of banned products. Consequently, dangerous goods, including hazardous cosmetics and unsafe children's toys, frequently remained accessible to consumers for prolonged durations.

The enforcement body also criticized the platform's merchant disciplinary structures and its anti-counterfeiting protocols. The mandatory brand authorization process intended to block counterfeiters was deemed understaffed and easily bypassed by unauthorized vendors, allowing penalized merchants to continue operations under alternative profiles. Although the final penalty could have reached six percent of the parent company's global annual revenue, the Commission noted that the relative novelty of the DSA served as a mitigating factor to temper the total financial assessment. Even with this consideration, the penalty substantially outpaces previous DSA sanctions, including a €120 million fine levied against social media platform X and the prior financial penalty applied to Temu.