Brussels (Belgium) (AFP) – The EU on Monday slapped a 550-million-euro ($630 million) fine on online retailer AliExpress for allowing the sale of illegal products, including unsafe toys and cosmetics. The European Union said AliExpress also did not do enough to stop the sale of counterfeit products, and that when the platform detected illegal goods were on sale, many remained online for several weeks. The EU found some of the products sold on the platform did not meet the bloc’s strict environmental and safety standards during its investigation into AliExpress, launched in March 2024.
“Risks must be identified and addressed systematically to ensure consumers can safely shop online. Today, we are holding AliExpress to this standard and request it to take action,” EU tech chief Henna Virkkunen said in a statement. It is the largest fine ever imposed under the EU’s powerful Digital Services Act (DSA), part of the bloc’s legal armoury to police big tech that entered into force in 2022. Elon Musk’s X social media platform received a 120-million-euro fine in December last year, while the EU slapped e-commerce giant Temu with a 200-million-euro fine in May.
AliExpress criticised the “disproportionate” fine, saying in an updated statement that the EU’s decision “ignores our sound risk management framework and the significant, proactive enhancements we have made”. The company added it would appeal the fine. The EU said the amount took into consideration the nature of the violations, the impact on Europeans, and the duration of the infringements. AliExpress is the biggest Chinese e-commerce platform in the EU with 193 million users, while Asian fashion giant Shein and retailer Temu respectively have 156 million and 130 million users. The EU is AliExpress’ biggest market, a senior European official said.
Under the DSA, the world’s most popular digital platforms—including social media networks and online retailers—must evaluate what risks they pose and take measures to tackle the dangers.
The EU said AliExpress “overestimated the effectiveness of its system in detecting and removing illegal products”. Millions of products would also reappear, the EU official said. Many illegal products would be recommended to users before they were removed, and those selling illegal goods were still able to remain active on AliExpress. The platform also did not “adequately” stop the sale of counterfeit products because its mandatory “brand authorisation” system “proved ineffective and understaffed.” Therefore, traders easily bypassed this, the EU found.
The DSA is part of a strengthened legal weaponry to rein in what the EU views as Big Tech’s excesses, and fines can go as high as six percent of a company’s total worldwide annual turnover. The EU official said the global turnover of Alibaba, AliExpress’ parent company, was 122 billion euros last year, but the fine was well below six percent of that.
AliExpress has to now pay the fine and present a plan to the EU by October 20 that includes what action it will take to tackle the breaches. If it does not comply, AliExpress risks periodic penalty payments. Virkkunen told reporters that AliExpress was “cooperating very actively” with the European Commission, the EU’s digital watchdog. The EU has stepped up its efforts in recent years to combat what it says is unfair competition from Chinese retailers, including slapping a levy of three euros this month on cheap parcels entering the 27-nation bloc. But Virkkunen insisted the EU did not target platforms based on their origin. “We are investigating several online platforms. So a big part of them are from the USA, many of them are from China, and also from Europe,” she said.
© 2024 AFP
