BRUSSELS, Belgium: The European Union on Monday imposed a record €550 million ($629 million) fine on Alibaba-owned AliExpress for failing to curb the sale of illegal, unsafe and counterfeit products on its platform, marking the third penalty issued under the bloc's Digital Services Act (DSA).

The European Commission said AliExpress failed to comply with DSA requirements to assess and mitigate the risks associated with the spread of illegal products. It charged the company in June last year and has given it until Oct. 20 to propose remedial measures. AliExpress could face further penalties if regulators decide in December that its proposals do not comply with the DSA.

"This is very dangerous for consumers, unfair for companies which are complying with all our rules," EU tech chief Henna Virkkunen told reporters.

Virkkunen said AliExpress had 193 million users in Europe last year, compared with 156 million for Shein and 130 million for Temu.

"One in five Europeans say they shop once a month from Shein, Temu and AliExpress," she said.

AliExpress said it would appeal the fine, calling it excessive.

"Today's decision and disproportionate fine ignores our sound risk management framework and the significant, proactive enhancements we have made," the company said in an email.

The company also said it has worked with the Commission to meet its "evolving expectations."

The Commission said AliExpress had not properly assessed whether it had enough staff to review risks and had overestimated the effectiveness of its systems for detecting and removing illegal products.

It also criticized the company's recommender and advertising systems for contributing to the spread of illegal products and said its reliance on a single quantitative indicator to measure its moderation system was inadequate.

According to the regulator, counterfeit products, unsafe toys and dangerous cosmetics remained available on the platform for weeks because AliExpress failed to detect them. It also said the company's penalty policy allowed sanctioned businesses to continue selling illegal products, while its mandatory "brand authorisation" system was ineffective, understaffed and easily circumvented by traders selling counterfeit goods.

The Commission said the novelty of the DSA was a mitigating factor in calculating the fine, which could otherwise have been higher.

The penalty is significantly higher than the €120 million fine imposed on Elon Musk's social media platform X in December last year and the €200 million fine issued to Temu in May, both for DSA violations.

AliExpress avoided a separate fine in June last year after agreeing to measures to tackle the dissemination of potentially illegal and pornographic materials on its platform.