European Commission fines AliExpress €550 million for counterfeit goods

European Commission Slaps AliExpress with €550 Million Fine Over Counterfeit Goods

The European Commission has levied a substantial €550 million fine against online retail giant AliExpress, citing significant failures in combating the spread of counterfeit and illegal products on its platform. The enforcement action, taken under the Digital Services Act (DSA), highlights critical shortcomings in AliExpress's content moderation and risk assessment processes.

According to the EC, AliExpress appears to have overestimated the efficacy of its internal systems designed to identify and remove illicit merchandise. Furthermore, the platform's recommender and advertising systems were found to inadequately address how they might inadvertently amplify the distribution of illegal items. The Commission points out that AliExpress relied on a single quantitative metric that failed to accurately measure the success of its moderation efforts in preventing the appearance or re-emergence of illegal products.

The EC's investigation revealed that AliExpress's system for detecting illegal products was fundamentally flawed, permitting "many illegal products" to remain available for sale. Even when detected, these infringing items often stayed online for extended periods, sometimes "for multiple weeks." A further blow to consumer protection, AliExpress reportedly failed to consistently enforce its penalty policies for vendors peddling illegal goods. The company's product compliance checks also proved vulnerable, easily circumvented by sellers who intentionally mislabeled their offerings.

Consequently, the EC concluded that AliExpress "failed to adequately prevent the spread of counterfeit products." Even its mandatory 'brand authorization system,' intended as a safeguard against counterfeit sales, was deemed "ineffective and understaffed," allowing unscrupulous traders to bypass its intended purpose.

AliExpress has been given a deadline of October 20 to submit a comprehensive action plan to the European Commission. This plan must detail the specific "measures to remedy the breach of its obligations to assess and mitigate systemic risks." Following the submission, the European Board for Digital Services will have one month to provide its opinion, with the EC then taking a further month to render its final decision and establish a "reasonable period" for implementation.

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