Report from Politico
In Brief – The European Commission has announced a fine of €550 million for Chinese e-commerce giant AliExpress for failing to curb the sale of illegal and harmful products, the largest penalty yet imposed under the EU’s Digital Services Act (DSA). The law requires major online platforms to assess and mitigate risks linked to illegal goods and content. Regulators found that AliExpress failed to adequately assess staffing needs for product moderation, leaving reviewers with only seconds to evaluate listings, and did not properly address how its advertising and recommendation systems amplified illegal products. Counterfeit products, unsafe toys and dangerous cosmetics remained available on the site for extended periods, with some continuing to be recommended and advertised after authorities knew they violated EU standards. Noting that rival marketplace Temu was fined €200 million in May for DSA shortcomings, the Commission said AliExpress’s breaches were more serious and more prolonged. The company, which must submit a compliance plan by October 20, called the fine disproportionate and said it would appeal.
Context – Although the DSA was often described as a response to online hate speech, disinformation, and threats to children, the European Commission always argued that the law was very clear in covering all platforms that expose their users to content which can be illegal, including online marketplaces for physical or digital goods, which they argued could be dangerous, fraudulent, or illegal. Marketplaces AliExpress, Shein and Temu have each faced DSA investigations, and regulatory scrutiny of the rapidly growing newcomers Shein and Temu is quickly expanding. France is a particular hotspot. Its Minister of Small and Medium Businesses said earlier this year that the Chinese ecommerce platforms will face a “year of resistance” from traditional storefront retailers and their backers in the French government. With TikTok and the three Chinese marketplaces all facing DSA enforcement, EU officials likely believe they have a good talking point against charges that their tech regulations discriminate against US companies.