The European Commission has today issued a €550 million fine against Chinese e-commerce giant AliExpress for failing to “diligently assess and mitigate the risks related to the sale of illegal, unsafe or counterfeit products,” according to an official press release. The company was found to be in breach of its obligations under the EU’s Digital Services Act (DSA).
The DSA orders that online platforms like AliExpress take measures to review potentially illegal products, and finds that AliExpress apparently “underestimated the effectiveness of its systems in detecting and removing illegal products”. It “inadequately assessed how its recommenders and advertising systems increase the spread of illegal products”. The EC says AliExpress “relied only on a quantitative indicator, which, however, did not properly measure how well its moderation system prevented the risk of illegal products appearing or re-appearing in similar forms”.
The EC further said that AliExpress’s systems for detecting illegal products did not work properly, allowing “numerous illegal products” to circulate on the platform. Even after they were discovered, they remained online “for several weeks”. AliExpress also did not properly enforce its penalty policy for merchants selling illegal products, and its product compliance checks could be easily bypassed by sellers mislabeling their products.
Thus, in the end, according to the EC, AliExpress “failed to adequately prevent the spread of counterfeit products”. The company’s mandatory ‘Brand Authorization System’, intended to prevent counterfeit sales, “proved ineffective and understaffed”, allowing merchants to easily bypass the system.
AliExpress now has until October 20 to submit an action plan to the EC, setting out “measures to remedy the breach of its obligations to assess systemic risks and mitigate them”. The European Board for Digital Services will then have one month from receipt of the plan to issue its opinion. The Election Commission will then have another month to adopt its final decision and set a “reasonable period” for implementation.