Alibaba Group's (BABA) AliExpress unit was fined 550 million euros ($628.9 million) by the European Commission for failing to comply with the Digital Services Act, the European Commission said Monday.
The regulatory agency penalized the web platform because it failed to diligently assess and mitigate risks tied to the sale of counterfeit and hazardous items, the EC said.
Deficient screening and insufficient staffing for compliance and moderation checks allowed merchants to easily circumvent product-compliance categories, the regulator said.
The company has a deadline of Oct. 20 to present a formal operational plan outlining steps to fix these compliance gaps, the agency said.
Shares of the company were up 4% in Monday premarket trading.