Alibaba has been fined €550 million ($629 million) by the European Commission over illegal and counterfeit goods sold through AliExpress, marking the largest penalty issued so far under the EU’s Digital Services Act.
The commission issued the fine under the Digital Services Act (DSA), a broad piece of legislation aimed at making large online platforms do more to combat illegal content, products, and services.
It is the second Chinese ecommerce operator to be fined and is much larger than the two previous penalties issued under the DSA: €200 million ($228 million) for Temu and €120 million ($137 million) for Elon Musk’s microblogging site X. Shein, another Chinese ecommerce operator, is currently being investigated by the commission under the same act.
Alibaba’s fine much larger than the previous two
According to the European Commission, the larger penalty reflected repeated warnings to AliExpress about illegal listings, inadequate systems for identifying and removing them, and insufficient safeguards to prevent repeat offenders from returning to the platform.
AliExpress has 193 million customers in Europe, more than Shein and Temu, according to the commission. This makes it a larger target under the DSA, which allows fines of up to six percent of a company’s global annual turnover.
There has been pushback from companies and governments over the DSA, as the European Commission is mainly targeting American and Chinese companies. U.S. President Donald Trump has previously threatened retaliatory tariffs and sanctions over large EU fines imposed on American companies.
The threat appeared to have an effect last year, with delays to fines against Google, but the commission has since fined the search giant and other American companies.
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Alibaba expanding more heavily into Europe
Alibaba has been investing more heavily in Europe, with the end of the de minimis exemption hurting AliExpress and other low-cost marketplaces such as Temu and Shein. It has expanded its warehousing and shipping operations in Europe over the past few months.
At the same time, it has opened more cloud operations in the region, possibly getting ahead of cloud sovereignty rules that may limit non-European operators. It launched its first cloud region in France last month, with two availability zones in Paris, and more are expected to follow.
Alibaba has also been expanding the availability of its Qwen AI models in Europe as competition in enterprise AI intensifies. The company has made inroads over the past few months with Qwen, which has received significant support from the business community in China due to the company’s lead in the country’s cloud computing market.
The record penalty signals that the European Commission is willing to use the Digital Services Act aggressively against the world’s largest online marketplaces. As Alibaba expands its presence across ecommerce, cloud computing, and AI in Europe, regulatory scrutiny is likely to intensify.
More News: The EU has ordered Google to open key Android AI features and share anonymized Search data with rivals.