AliExpress fined record €550m by EU for allowing sale of illegal goods

Here is a story making headlines in the economy: AliExpress fined record €550m by EU for allowing sale of illegal productsImage source, NurPhoto / Getty ImagesImage caption, AliExpress has 193 million users in the EUByEmer MoreauBusiness reporterPublished16 minutes agoChinese online retail giant AliExpress has been fined a record €550m (£467m) by the EU for allowing the sale of illegal products such as unsafe toys and counterfeit clothes. The penalty is the highest fine imposed under the Digital Services Act, which requires tech giants to do more to counter illegal and harmful content. The European Commission said AliExpress fell short of its obligation under the Act to "diligently assess" the risk of illegal, unsafe or fake goods on its platform.

The company said the fine was disproportionate and that it has made enhancements to its processes. The Commission's two-year investigation found that AliExpress's detection systems "did not work properly", with many illegal products not flagged while others that were identified remained on the site for several weeksIt also found the company did not properly enforce penalties on traders selling illegal goods. Furthermore, its product compliance checks could be "easily circumvented".

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AliExpress, which is owned by the Chinese tech conglomerate Alibaba, has 193 million users in Europe, more than fellow Chinese online retailers Shein or Temu. The fine is the third handed out under the Digital Services Act. The first two were given to Temu and X, and Shein is being investigated under the Act.

The Act allows for fines of up to 6% of a company's revenue, but as Alibaba had a global turnover of €122bn last year, the fine is far short of that. Henna Virkkunen, the Commission's Executive Vice President for Tech Sovereignty, Security and Democracy, said that "scale is not an excuse" for selling dangerous or illegal goods. "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," she said.

AliExpress said in a statement: "We disagree with today's decision and the disproportionate fine, which does not adequately reflect our established framework and the significant, proactive enhancements we have made. "We are carefully reviewing the decision and considering all available options. "The company now has to pay the fine and present a plan to the EU by 20 October that includes what action it will take to tackle the breaches.

Earlier this year, Temu was given a €200m fine for allowing the sale of illegal products such as dangerous baby toys. And Elon Musk's X was fined €120m last year, after the Commission said allowing users to pay for its blue tick badges was deceptive because the social media platform was not "meaningfully verifying" who was behind the account and exposed users to scams. Related topicsEuropean CommissionAlibabaMore on this storyOnline marketplaces still selling dozens of unsafe baby products, Which?

Financial markets are tracking the development closely as investors assess the likely impact.