The European Commission has imposed a €550 million fine on Chinese e-commerce platform AliExpress for breaching the European Union's Digital Services Act (DSA), marking the largest financial penalty issued under the landmark online content regulation since it entered into force.

The decision, announced on Monday, follows a lengthy investigation into the Alibaba-owned marketplace's handling of illegal and unsafe products sold through its platform.

The DSA, which became fully applicable to the EU's largest online platforms in 2024, requires digital services to identify, assess, and mitigate systemic risks, including the sale of counterfeit, unsafe, and illegal products. Under the regulation, activities that are illegal offline must also be prevented online.

Investigation Found Failures to Address Illegal Products

The European Commission opened formal proceedings against AliExpress in 2023 before expanding its investigation throughout 2024.

According to the Commission, the company failed to adequately assess and reduce risks associated with the sale of counterfeit goods, unsafe consumer products, and prohibited items offered by third-party sellers on its marketplace.

Investigators concluded that AliExpress had not implemented sufficiently effective systems to detect and remove illegal listings, thereby failing to meet its obligations under the Digital Services Act.

European Commission Executive Vice-President Henna Virkkunen, who oversees technology and digital policy, said consumers should not have to accept exposure to dangerous or counterfeit products as a consequence of shopping online.

"The spread of counterfeit clothing, unsafe toys, dangerous cosmetics and other illegal and harmful products is not an unavoidable cost of shopping online—it is a failure by AliExpress to comply with its obligations under the Digital Services Act. Scale is not an excuse," she said.

Largest DSA Fine to Date

The €550 million penalty is the largest sanction imposed under the Digital Services Act since the legislation came into effect.

It follows previous enforcement actions against other major online platforms, including social media platform X, which was fined €120 million, and Chinese online retailer Temu, which received a €200 million penalty.

The Commission noted that Temu remains under investigation and indicated that its financial penalty could increase if additional violations are confirmed.

AliExpress Ordered to Strengthen Compliance

Alongside the financial penalty, the Commission has ordered AliExpress to strengthen its content moderation and risk management systems to better detect counterfeit, unsafe, and illegal products.

The platform will also be required to improve transparency regarding seller verification, product traceability, advertising systems, and mechanisms allowing consumers and regulators to report illegal listings more effectively.

Failure to comply with the Commission's order could expose the company to additional penalties under the Digital Services Act.

Company Expected to Challenge Decision

AliExpress acknowledged the Commission's decision and said it is reviewing the findings. The company stated that it has invested significantly in improving consumer safety, seller verification, and product monitoring in recent years and will continue cooperating with European regulators.

Legal experts expect Alibaba to appeal aspects of the decision before the Court of Justice of the European Union, although the company is also likely to implement further compliance measures while legal proceedings continue.

EU Steps Up Digital Enforcement

The action against AliExpress forms part of the European Union's broader effort to strengthen oversight of major online platforms operating within the bloc.

Since the Digital Services Act came into force, the Commission has increased investigations into large technology companies and e-commerce marketplaces over issues including illegal products, consumer protection, online safety, algorithmic transparency, and the spread of harmful content.

EU officials have repeatedly stated that enforcement of the DSA is intended to create a safer digital marketplace by ensuring that large online platforms take greater responsibility for the products and services offered through their ecosystems.

The latest decision signals the Commission's willingness to impose substantial financial penalties on companies that fail to comply with the bloc's digital regulations, reinforcing the EU's position as one of the world's most active regulators of major technology and e-commerce platforms. (ILKHA)