Recently, several sky-high fines have put the European Union in the spotlight. On July 20, local time, the European Commission announced a €550 million fine (approximately RMB 4.25 billion) on AliExpress, the cross-border e-commerce platform under Alibaba Group. The EU’s stated reason was that AliExpress violated the EU’s Digital Services Act (DSA) by failing to fulfill its obligation to systematically assess the risks of illicit product circulation. The €550 million fine set a new record for the highest penalty since the Act came into effect. China’s Ministry of Commerce immediately responded: China firmly opposes the EU’s use of platform regulation as a pretext to erect digital barriers and adopt discriminatory measures that restrict and suppress the normal operations of Chinese e-commerce companies in Europe.
Nor is it just Chinese companies. Three days later, the EU deployed another digital platform regulation, the Digital Markets Act (DMA), to slap Google with an €890 million fine (approximately RMB 6.86 billion), alleging misconduct such as favoring its own services in search results.
The DSA and DMA are two pieces of legislation that the EU has tailored in recent years to regulate digital platforms. However, since taking effect, these two laws seem to have become deeply “entangled” with fines. Apple, Meta, X (formerly Twitter), Temu (Pinduoduo’s international version), and others have all been fined in succession, with penalties exceeding €100 million each. Fast-fashion retail platform Shein is also under investigation.
You read that right — every single company fined is a non-EU enterprise.
Because Europe’s domestic digital capabilities are limited, most internet services currently rely on overseas software, particularly apps from China and the United States. While these apps provide local residents with various services covering daily necessities, they have also become the hardest-hit targets of EU fines.
Kent Walker, President of Global Affairs at Google and Alphabet, told the media after being fined that such penalties do not conform to the principles of fair competition. AliExpress also voiced its protest, disagreeing with the disproportionate fine.
In fact, the justification for the EU’s penalties against companies under the DSA and DMA has been widely criticized. First, there is the issue of vague legal definitions. An article by Adina Portaru, Senior Legal Advisor at ADF, published by the Oxford Human Rights Hub, pointed out that the DSA requires platforms to remove “illegal and harmful” content and combat “disinformation,” but these concepts are largely undefined.
Second, there is a lack of oversight in the review process. Portaru noted that the two laws grant competent authorities excessive discretionary power, which is not subject to judicial review by independent courts or tribunals — a clear lack of checks and balances.
China’s Ministry of Commerce also emphasized in its statement that China urges the EU to stop exploiting the ambiguity of legal provisions to abuse discretionary power and to treat Chinese enterprises fairly and justly.
The timing of the EU’s two fines against Chinese and American companies is also worth pondering. Since the beginning of this year, the EU has been mired in a budgetary impasse. Major contributors such as Germany have been calling for “lower budgets and reduced contributions,” while beneficiary countries like Greece and Italy are eagerly awaiting financial support. The conflicting demands of the two sides have placed considerable financial pressure on the EU.
On one hand, the coffers are tightening; on the other, fines are being issued frequently. Is this platform regulation, or a disguised form of “revenue generation”?
This “short-sighted” approach to penalties may seem to put hundreds of millions of euros into the pocket, but in reality, it is killing the goose that lays the golden eggs. Kent Walker pointed out that regulation should help companies improve their products, rather than force them to degrade the user experience in order to comply. The product downgrades caused by fines will ultimately be borne by European businesses and consumers.
More fundamentally, while fines may bring short-term fiscal revenue, they harm long-term industrial prosperity. Cracking down on digital platforms may fundamentally weaken Europe’s already fragile digital competitiveness. The EU Reporter noted that at a time when Europe is suffering from a serious innovation deficit and a lack of vitality in the high-tech market, the EU is doubling down on regulations that burden industries in urgent need of development. The regulatory philosophy behind laws such as the DMA treats companies as problems to be controlled, rather than engines of prosperity, which will drive foreign companies to shift investment, talent, and innovation to regions that offer greater economic freedom.
As the saying goes, freedom and openness are the key words for today’s global economic development. Competing with one hand tied behind your back is tantamount to courting decline. If Europe continues down the path of restrictions and prohibitions, it will only drive technology and progress further and further away.