Why EU Slapped AliExpress With A Record $629 Million Fine | FP Explains

[00:00:01]The EU just handed AliExpress a $629 million fine.

[00:00:06]The biggest ever under the Digital Services Act for letting [music] illegal, unsafe, and counterfeit products circulate on its platform.

[00:00:16]To put that in perspective, Alibaba's annual global revenue sits at around $139 billion.

[00:00:24]So, this fine lands at well under 1% of that. Whether that actually stinks is a fair question. The European Commission spent more than 2 years on this investigation. And what they found was not exactly [music] a single catastrophic failure. It was more like a series of smaller ones stacking up. AliExpress's [music] detection tools were apparently missing illegal listings on a regular basis.

[00:00:51]And even [music] when something suspicious did get flagged, it could sit on sale for weeks before anyone pulled it.

[00:00:59]EU alleges AliExpress of listing dangerous toys, counterfeit clothing, [music] unsafe cosmetics, reportedly all findable if you knew where to look. And sometimes [music] even if you didn't, since the platform's own recommendation system allegedly surfaced some of this stuff before it was eventually removed.

[00:01:20]The staffing situation described in the investigation is worth paying attention to.

[00:01:25]Some inspectors [music] reportedly had just a few seconds per listing to decide whether a product met EU safety requirements. That is not a process that is going to catch much.

[00:01:38]Sellers who repeatedly [music] posted illegal goods were not being consistently penalized, either. Which meant the same bad actors could keep operating. Regulators also claimed [music] that compliance checks could be gamed, with banned or unsafe products finding their way back onto the platform after removal. EU technology chief's position was [music] straightforward.

[00:02:02]Consumers should not have to treat counterfeit or dangerous products [music] as an expected part of shopping online.

[00:02:10]And AliExpress had failed to hold up its end of [music] the bargain under the DSA.

[00:02:16]>> 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.

[00:02:31]>> AliExpress pushed back. The company called the [music] fine disproportionate and said it plans to appeal, pointing to the investments [music] it had made in the safety and risk management and arguing the commission had not given those efforts proper weight.

[00:02:47]That might [music] or might not land with the appeals process, but the October 28th deadline for submitting a remediation plan is not [music] going anywhere in the meantime. If the commission is not satisfied with that plan, further penalties are on the table.

[00:03:05]>> Today's decision in disproportionate fine ignores our sound risk management framework and the significant proactive enhancements we have made.

[00:03:13]>> AliExpress is the biggest Chinese shopping platform [music] operating in Europe right now with around 193 million users. Which puts it ahead of Shein and Temu in the region. That scale is presumably part of why Brussels went this hard. The DSA allows fines of up to 6% of global turnover for serious violations. So, there was room to go higher. This case is probably not the last of its kind.

[00:03:45]>> Want the facts?

[00:03:46]>> The latest developments?

[00:03:47]>> News that gets straight to the point?

[00:03:50]>> Well, we've got all three just for you.

[00:03:52]This is First Post Live, a brand new show, your window into what really matters.

[00:03:57]>> Don't miss it.