European Commission finds AliExpress breached digital rules on illegal products

The European Commission has delivered preliminary findings that AliExpress, the Chinese-owned e-commerce marketplace, has breached its obligations under the Digital Services Act (DSA) in its handling of illegal products. The decision, announced on Wednesday, marks the first significant enforcement action against a very large online platform from China under the EU's new digital rulebook.

The investigation, launched in March 2024, examined whether AliExpress, designated as a Very Large Online Platform (VLOP) under the DSA, had properly assessed and mitigated the risks its service poses for the spread of illegal content and goods. The Commission concluded that the company failed to properly consider these risks and that its content moderation systems show systemic failures. It also found that AliExpress does not enforce its own policy against traders that sell illegal goods.

A mixed compliance picture

The findings are not uniformly negative. The Commission accepted the company's commitments in several other areas of DSA compliance, covering what a Commission official described as the majority of the concerns raised in the investigation. These accepted areas include how AliExpress monitors the potential health impacts of goods sold on the platform, its notification system for illegal goods, and its internal complaint handling system.

The company also received sign-off for changes made to the transparency of its advertising and recommender systems, improvements to the traceability of traders, and provisions for access to public data for researchers. A Commission official said these commitments cover the majority of the concerns identified when the investigation was opened last year.

Where the failures lie

The critical gaps identified by the Commission centre on three specific practices. First, the use of hidden links, where illegal goods, often counterfeit branded products, are concealed behind the image of a completely legal product. Second, the verification of influencers who promote products on the platform. Third, the verification of food supplements and medical products sold through the marketplace.

These shortcomings go to the core of the DSA's risk assessment requirements for very large platforms. The law requires VLOPs to conduct annual assessments of the systemic risks their services pose, including the dissemination of illegal content, and to put in place proportionate mitigation measures. The Commission's finding that AliExpress failed to properly consider these risks suggests a fundamental gap in the company's compliance architecture.

Binding commitments and a monitoring trustee

The Commission is making AliExpress's commitments legally binding, meaning future breaches can lead to fines of up to 6% of the company's global annual turnover under the DSA. The company must implement a new internal monitoring framework and submit reports to an independent Monitoring Trustee, a mechanism the DSA provides for in cases where a platform's own oversight is deemed insufficient.

The Monitoring Trustee arrangement is significant. It places an external, independent expert between the platform and the regulator, with the power to verify compliance on an ongoing basis. This is a more intrusive form of oversight than the standard reporting requirements and signals the Commission's view that AliExpress cannot be left to police itself on the outstanding issues.

The company's response

In a statement, an AliExpress spokesperson welcomed the Commission's recognition of what the company described as its committed approach to consumer protection and transparency. The spokesperson said the company is confident that ongoing discussions with the regulator on the remaining concerns will lead to a positive and compliant result. The tone is cooperative, but the substance of the Commission's findings, systemic failures in content moderation and trader enforcement, suggests the work required is substantial.

A new era of platform accountability

The DSA, which became fully applicable to very large online platforms in August 2024, represents a shift from self-regulation to enforceable obligations. Platforms with more than 45 million monthly active users in the EU, currently around two dozen services, must comply with a raft of requirements on risk assessment, transparency, data access and content moderation. The AliExpress case is among the first to test the Commission's willingness to use its new powers.

The regulation gives the Commission the authority to impose fines of up to 6% of global turnover for non-compliance and, in extreme cases, to seek a temporary ban of the service in the EU. While the AliExpress findings are preliminary and the company has the right to respond before a final decision, the binding commitments mechanism allows the Commission to lock in progress while keeping the threat of penalties alive.

The hidden links problem

The Commission's specific focus on hidden links highlights a persistent challenge in e-commerce regulation. The technique, displaying a legitimate product image while linking to a counterfeit or non-compliant item, exploits the gap between what a platform's automated systems can detect and what a human reviewer would recognise. It also undermines the DSA's traceability requirements, which are designed to ensure that every trader on a platform can be identified and held accountable.

For AliExpress, which hosts millions of third-party sellers, the scale of this problem is likely significant. The platform's business model relies on low barriers to entry for merchants, many of them based in China, selling directly to European consumers. The Commission's insistence on addressing hidden links suggests it views this not as a marginal issue but as a structural vulnerability in the platform's architecture.

Influencers and health products

The other two outstanding areas, influencer verification and health product oversight, reflect broader regulatory concerns that extend beyond AliExpress. The DSA requires platforms to ensure that commercial communications are clearly identifiable and that the traders behind them are traceable. Influencer marketing has become a primary channel for product promotion on e-commerce platforms, and the Commission's focus here signals that it expects platforms to verify the identity and compliance of those promoters, not just the merchants.

Food supplements and medical products pose a different kind of risk. These categories sit at the intersection of consumer protection and public health, and the sale of unverified or misleading products can have direct physical consequences. The DSA's risk assessment framework explicitly includes risks to public health, and the Commission's findings suggest AliExpress's current verification processes for these categories fall short of what the law requires.