The European Commission has today issued a fine of €550 million against the Chinese e-commerce giant AliExpress for failing to “diligently assess and mitigate risks relating to the sale of illegal, unsafe or counterfeit products”, according to the official press release. The company was found to be breaching its obligations under the EU’s Digital Services Act (DSA).
The DSA mandates that online platforms like AliExpress take measures to review potentially illegal products, and AliExpress apparently “overestimated the effectiveness of its system in detecting and removing illegal products”. It also “inadequately assessed how its recommender and advertising systems exacerbate the spread of illegal products”. The EC says AliExpress “relied only on one quantitative indicator, that, however, did not properly measure how well its moderation system prevented the risk of illegal products appearing or reappearing in similar forms”.
The EC further states that AliExpress’ system to detect illegal products didn’t work properly, allowing “many illegal products” to circulate on the platform. These remained online “for multiple weeks” even when they were detected. AliExpress also didn’t properly enforce its penalty policy for traders selling illegal products, and its product compliance checks could easily be 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”, letting traders easily bypass the system.
AliExpress now has until October 20 to submit an action plan to the EC, which has to set out “measures to remedy the breach of its obligations to assess and mitigate systemic risks”. The European Board for Digital Services will then have one month from the receipt of the plan to issue its opinion. The EC will then have a further month to adopt its final decision and set “a reasonable period” for implementation.
