EU hits AliExpress with record $629m fine in e-commerce crackdown

The European Commission fined Alibaba’s AliExpress €550 million ($629 million) on Monday for systemic failures in removing illegal and counterfeit products. This marks the largest penalty yet levied under the EU’s landmark Digital Services Act, a framework designed to force major online platforms to police harmful content.

Regulators determined that AliExpress drastically overestimated the effectiveness of its moderation systems. Unsafe toys, dangerous cosmetics, and counterfeit goods routinely remained online for weeks. The platform relied on a single quantitative metric to measure its risk mitigation, while its mandatory "brand authorisation" system was understaffed and easily circumvented by rogue traders.

The platform’s own technology exacerbated the issue. Regulators criticised AliExpress’ recommender and advertising algorithms for actively pushing illegal products to consumers. Additionally, the company's internal penalty system proved ineffective, allowing sanctioned sellers to simply set up new accounts and continue distributing illicit goods.

The fine dwarfs the €120 million penalty handed to Elon Musk’s X in December and the €200 million fine issued to Temu in May. It signals an escalating regulatory crackdown on Chinese e-commerce platforms that have rapidly captured European market share through ultra-low prices.

EU tech chief Henna Virkkunen highlighted the sheer scale of this market penetration. She noted that AliExpress had 193 million users in Europe last year, outpacing Shein's 156 million and Temu's 130 million. "One in five Europeans say they shop once a month from Shein, Temu and AliExpress," Virkkunen told reporters.

"This is very dangerous for consumers, unfair for companies which are complying with all our rules," Virkkunen added. Temu has already been penalised under the DSA, and Shein remains the subject of an ongoing EU investigation.

For investors, the immediate €550 million charge is less concerning than the ongoing operational and financial risks. The Commission has set an October 20 deadline for AliExpress to implement and propose remedial measures.

If regulators decide in December that these fixes do not adequately comply with the DSA, AliExpress will face further penalties. Under EU rules, these subsequent fines could reach as much as 6 per cent of the company's global annual turnover.

Alibaba did not immediately respond to requests for comment. The Commission noted that the novelty of the DSA served as a mitigating factor in calculating the record fine, meaning future non-compliance could result in even steeper financial consequences.

This is not the first time AliExpress has skirted a maximum penalty. In June last year, the platform avoided a fine—also potentially worth up to 6% of global turnover—after agreeing to measures targeting illegal and pornographic materials on its site.