EU launches probe into AliExpress over pornography on platform

Alibaba Group Holding Ltd (NYSE: BABA) is in focus today after the European Commission launched a probe into its eCommerce platform – AliExpress.

Did AliExpress violated the Digital Services Act?

The formal investigation is related to concerns of illegal content on AliExpress.

In particular, EU wants to explore whether AliExpress violated the Digital Services Act in “areas linked to management and mitigation of risks, content moderation, and internal complaint handling mechanisms.”

The executive arm of the European Union also wishes to investigate if the eCommerce platform breached regulations related to “transparency of advertising and recommender systems, traceability of traders, and data access for researchers”.

Shares of Alibaba Group Holding Ltd are now down more than 25% versus their 52-week high in March of 2023.

AliExpress may have failed to enforce its terms of service

Note that the critical Digital Services Act or “DSA” came into effect just weeks ago.

On Thursday, the European Commission said it will scrutinize whether AliExpress failed to restrict access for minors to pornographic material that is still available on the eCommerce platform.

All in all, the regulator wishes to find out if the online retail company based out of Hangzhou, China failed to enforce its own terms of service.

The news arrives about a month after Alibaba raised its share repurchase commitment even though revenue came in shy of Street estimates in the third quarter. $BABA was also recently reported interested in investing $1.1 billion in South Korea.