European Authorities Impose Hefty Penalty on Chinese E-Commerce Behemoth for Unlawful Merchandise
A Chinese online shopping platform has been hit with a staggering fine of 550 million euros for not preventing the sale of illegal and harmful items. The fine is the highest ever imposed for such an offense.
The extensive list of illicit goods included counterfeit products, unsafe toys, and hazardous cosmetics. Despite being aware of their harmful nature and illegal status, these items remained available for purchase on the platform for a prolonged period.
Unprecedented Penalty Under Digital Services Act
The penalty was issued under the region's rulebook for regulating online platforms, known as the Digital Services Act (DSA). The DSA mandates that major platforms take responsibility for assessing and mitigating the risks of illegal content and goods on their systems. The fined company, a subsidiary of a Chinese tech titan, was found guilty of not adhering to these regulations.
The lack of action taken by the company to monitor and manage these risks poses a significant threat to consumers. Moreover, it places compliant companies at a disadvantage, creating an unfair business environment.
Third Instance of Large-Scale Fines
This fine is the third of its kind under the DSA. It follows a similar 200 million euro fine imposed on a competing marketplace two months prior for comparable violations. The decision on the fine's magnitude was influenced by the duration and severity of the infringements.
Findings of the Investigation
An investigation into the accused company began in March 2024, scrutinizing potential breaches of the DSA. These potential violations included lack of transparency in advertising and recommender systems. By June 2025, many of these suspected breaches had been addressed through a series of commitments.
In their latest findings, authorities concluded that the company failed to assess if it had adequate staff to review potential illegal products. It led to exhausted moderators having a mere 10 to 20 seconds to review each product. The company also neglected to evaluate how its recommender and advertising systems could amplify the spread of illegal items. Additionally, the company relied on compliance checks that could be easily bypassed by mis-categorization of products.
Call to Action
The company must now present an action plan by October 20 to rectify the infringements, which persisted until at least June 2025, or face further penalties.
In response to the fine, a representative for the company deemed the penalty "disproportionate." The company insists that it remains dedicated to fulfilling its obligations and has invested significant resources in risk assessment, product safety, and consumer protection. The representative also mentioned that the company is carefully reviewing the decision and contemplating all possible options.
A Chinese online shopping platform has been hit with a staggering fine of 550 million euros for not preventing the sale of illegal and harmful items. The fine is the highest ever imposed for such an offense.
The extensive list of illicit goods included counterfeit products, unsafe toys, and hazardous cosmetics. Despite being aware of their harmful nature and illegal status, these items remained available for purchase on the platform for a prolonged period.
Unprecedented Penalty Under Digital Services Act
The penalty was issued under the region's rulebook for regulating online platforms, known as the Digital Services Act (DSA). The DSA mandates that major platforms take responsibility for assessing and mitigating the risks of illegal content and goods on their systems. The fined company, a subsidiary of a Chinese tech titan, was found guilty of not adhering to these regulations.
The lack of action taken by the company to monitor and manage these risks poses a significant threat to consumers. Moreover, it places compliant companies at a disadvantage, creating an unfair business environment.
Third Instance of Large-Scale Fines
This fine is the third of its kind under the DSA. It follows a similar 200 million euro fine imposed on a competing marketplace two months prior for comparable violations. The decision on the fine's magnitude was influenced by the duration and severity of the infringements.
Findings of the Investigation
An investigation into the accused company began in March 2024, scrutinizing potential breaches of the DSA. These potential violations included lack of transparency in advertising and recommender systems. By June 2025, many of these suspected breaches had been addressed through a series of commitments.
In their latest findings, authorities concluded that the company failed to assess if it had adequate staff to review potential illegal products. It led to exhausted moderators having a mere 10 to 20 seconds to review each product. The company also neglected to evaluate how its recommender and advertising systems could amplify the spread of illegal items. Additionally, the company relied on compliance checks that could be easily bypassed by mis-categorization of products.
Call to Action
The company must now present an action plan by October 20 to rectify the infringements, which persisted until at least June 2025, or face further penalties.
In response to the fine, a representative for the company deemed the penalty "disproportionate." The company insists that it remains dedicated to fulfilling its obligations and has invested significant resources in risk assessment, product safety, and consumer protection. The representative also mentioned that the company is carefully reviewing the decision and contemplating all possible options.