Europe slaps AliExpress with €550 million fine for selling dodgy goods

The European Commission yesterday fined Alibaba subsidiary AliExpress 550 million ($630m/ 467m) for not doing enough to stop selling dodgy products - the largest ever fine issued under the Digital Services Act. AliExpress is Alibaba's consumer-facing e-commerce brand and complements the parent company's B2B biz. Brussels last year warned AliExpress that it wasn't doing enough to stop sellers on the service hawking illegal products, or to ensure its recommendation engines didn't promote those dodgy goods. Wielding the awesome powers of the Digital Services Act (DSA), Brussels told the Chinese e-commerce company to clean up its act and spelled out the steps required to do so. A year later, the Commission (EC) decided AliExpress hasn't done enough and announced the giant fine, which the Commission justified because it found AliExpress did not properly evaluate whether it had sufficient staff to review potentially illegal products, and did not conduct an adequate assessment of how its recommender and advertising systems exacerbate the spread of illegal products. The Commission also made the following four findings: AliExpress' system to detect illegal products did not work properly; AliExpress did not properly enforce its penalty policy for traders selling illegal products; AliExpress' product compliance checks could be easily circumvented through mis-categorisation of products; AliExpress failed to adequately prevent the spread of counterfeit products. In its announcement of the fine, the Commission noted that it set fine at 550 million after considering mitigating circumstances that operate in favor of AliExpress, such as the novelty of the Digital Services Act." The Act allows fines of up to six percent of global turnover and Alibaba Group's annual revenue was $148 billion for the year ended March 31st. Brussels could therefore have demanded almost $9 billion. The fine comes weeks after Europe introduced new customs fees seemingly designed to make life hard for Alibaba and its Chinese peers Temu and Shein. Europe doesn't like very cheap single-item imports, which policymakers fear can lead to illegal and unsafe products reaching the continent, at prices that local retailers can't match. The EC understands that its new fees could see e-tailers adapt their operations by shipping in bulk to warehouses within the European Union, an outcome felt to give the bloc a better chance of regulating cheap products. Fining AliExpress 550 million is another nudge towards changing business models. (R)