EU Fines Alibaba’s AliExpress €550 Million Over Illegal Goods

The European Commission has fined Alibaba Group’s cross-border e-commerce platform AliExpress €550 million ($628 million) for breaching the Digital Services Act (DSA), marking one of the largest penalties imposed under the landmark EU regulation. The Commission found that AliExpress failed to diligently assess and mitigate systemic risks relating to the sale of illegal, unsafe and counterfeit products on its platform.

Background

The fine, announced on July 20, follows a two-year investigation that began when the European Commission opened formal proceedings against AliExpress in March 2024. AliExpress was designated as a “Very Large Online Platform” (VLOP) under the DSA in 2023, subjecting it to the strictest tier of regulatory obligations due to its user base exceeding 45 million in the EU.

The investigation examined multiple areas including risk assessment, content moderation, advertising transparency, recommender systems, trader traceability, and researcher data access. In June 2025, the Commission accepted binding commitments from AliExpress addressing most concerns — but preliminary findings of non-compliance remained on risk assessment and mitigation of illegal product dissemination, the two areas that led to the current fine.

Nature of the Violations

The Commission identified two primary categories of DSA breaches. First, AliExpress failed to diligently assess risks: it did not properly evaluate whether it had sufficient staff to review potentially illegal products, overestimated the effectiveness of its detection systems, and inadequately assessed how its recommender and advertising systems exacerbated the spread of illegal products. Testing by Commission services showed many illegal products were recommended or advertised to consumers before removal.

Second, AliExpress failed to mitigate identified systemic risks. According to the European Commission, the platform’s detection system did not work properly — illegal products, from counterfeit goods to unsafe toys and dangerous cosmetics, circulated and remained online for multiple weeks even when detected. The penalty policy for traders selling illegal products was not adequately enforced, with stores remaining active despite being penalized. Product compliance checks could be easily circumvented through mis-categorization, and the mandatory brand authorization system intended to prevent counterfeit sales proved ineffective and understaffed.

Broader Regulatory Crackdown

The AliExpress fine is part of a coordinated EU regulatory push against Chinese cross-border e-commerce platforms. In May 2026, the Commission fined Temu €200 million for similar DSA violations. Shein has also faced scrutiny, with French customs finding nearly 25% of non-textile items shipped from the fast-fashion retailer failed safety and labeling standards.

As Caixin Global reported, the penalty “highlights a broader tightening of Europe’s regulatory regime for Chinese e-commerce platforms, including Temu and Shein, as authorities intensify scrutiny of consumer safety, product compliance and competitive fairness.”

In parallel with DSA enforcement, the EU has abolished the low-value import duty exemption and imposed a temporary €3 per-item customs duty on low-value imports, effective through July 1, 2028 — a move that directly impacts the low-cost, high-volume business model of platforms like AliExpress and Temu.

Official Response

Henna Virkkunen, European Commission Executive Vice-President for Tech Sovereignty, Security and Democracy, stated: “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. Scale is not an excuse; risks must be identified and addressed systematically to ensure consumers can safely shop online.”

What’s Next

The fine was calculated based on the nature, gravity, and duration of the infringements, which ran at least until June 2025. The Commission noted that failing to conduct proper risk assessments and mitigate systemic risks constitute “particularly serious infringements” of the DSA, though the novelty of the regulation was cited as a mitigating factor.

AliExpress now has until October 20, 2026, to submit a corrective action plan to the Commission detailing how it will remedy the breaches. The European Board for Digital Services will review the plan, and the Commission will adopt a final decision setting an implementation timetable. Failure to comply may result in additional periodic penalty payments.

Alibaba Group has not yet publicly responded to the fine. The €550 million penalty, while significant, represents a manageable amount for the Chinese e-commerce conglomerate, but adds to mounting regulatory pressures on its international operations as European authorities continue to assert their authority over the world’s largest tech platforms.