The European Union on Monday imposed a record fine of €550 million ($629 million) on AliExpress, the e-commerce platform owned by Alibaba Group, for failing to curb the sale of illegal, unsafe, and counterfeit products on its platform.

The fine is the third imposed by the European Commission under the Digital Services Act (DSA), which requires major online platforms to take stricter action against illegal and harmful content and goods, according to Reuters.

The Commission accused AliExpress in June of last year of failing to comply with DSA requirements related to assessing the risk of the spread of illegal products and taking necessary measures to reduce it.

The Commission set a deadline of October 20 for AliExpress to submit a plan with corrective measures, warning that the company could face additional penalties if the regulator concluded in December that it continued to be noncompliant with the DSA.

EU technology chief Henna Virkkunen told journalists: 'This poses a serious risk to consumers and also harms businesses that comply with all our rules.'

She added that AliExpress had 193 million users in Europe last year, compared to 156 million for Shein and 130 million for Temu, noting that Temu has also been fined under the DSA while Shein remains under an ongoing investigation.

Virkkunen said: 'One in five Europeans says they shop once a month on Shein, Temu, and AliExpress.'

AliExpress criticized the European fine, calling it 'disproportionate.'

The company said in an email statement: 'We disagree with today's decision and the disproportionate fine, which does not adequately reflect our established framework and the significant proactive improvements we have made.'

It added: 'We are carefully reviewing the decision and considering all available options.'

The European Commission noted that the fine imposed on AliExpress exceeds previous fines it imposed on Elon Musk's platform X and on Temu.

It added that AliExpress did not adequately assess whether it had the appropriate number of staff to review risks, and overestimated the effectiveness of its systems for detecting and removing illegal products.

The Commission also criticized the company's recommendation and advertising systems, saying they contributed to the spread of illegal products, as well as the company's reliance on a single quantitative indicator to measure the effectiveness of its monitoring system in preventing the appearance or reappearance of such products in similar forms.

It pointed out that AliExpress's failure to detect illegal products led to prohibited goods—including counterfeit products, unsafe toys, and dangerous cosmetics—remaining for sale on the platform for several weeks.

The Commission also criticized the company's sanctions policy, deeming it ineffective, as it allowed merchants who had previously been penalized to continue selling illegal products on the platform.

It added that AliExpress's mandatory 'brand license' system to prevent the sale of counterfeit goods proved ineffective and suffered from a lack of human resources, making it easier for merchants to circumvent it and continue selling fake products.

The Commission noted that the novelty of the Digital Services Act's application was one of the factors that reduced the fine amount, which could have been higher.

This fine far exceeds the €120 million fine imposed on platform X last December and the €200 million fine imposed on Temu in May, both for violations of the DSA.

In June of last year, AliExpress avoided a fine that could have reached 6% of its global annual revenue after agreeing to take measures to curb the spread of potentially illegal material on its platform.