TL;DR
Alibaba and its US payments arm will pay $600 million to settle a DOJ investigation into illegal pharmaceutical sales on its e-commerce platform.
Alibaba and its US digital payment processor have agreed to pay $600 million The Justice Department said Wednesday it will settle a federal investigation into its failure to prevent the sale and importation of illegal pharmaceuticals and controlled substances. Alibaba entered into a non-prosecution agreement between 2016 and 2024 to end an investigation into alleged violations of the Federal Food, Drug and Cosmetic Act. The investigation was conducted by the DOJ and the US Attorney’s Office in Rhode Island.
Alibaba acknowledged that overseas customers used its platform to purchase more than $200 million worth of products that were not approved under US drug, device or import laws. The products were not named in the settlement, but the DOJ said they involved pharmaceuticals, regulated chemicals and drug counterfeiting equipment. US agents have made more than 40 undercover purchases of drugs and equipment that were illegally imported.
The company admitted that “failed to prevent some third-party vendors from evading controls and measures” platform and used it to sell and import goods into the U.S. in violation of federal law.Alibaba employees raised internal concerns about compliance measures and filtering systems that did not catch illegal sales, the company acknowledged.
The settlement also includes AUS Merchant Services, a division of Ant International, which operates Alipay. AUS has acknowledged that its anti-money laundering program “failed to prevent certain Alibaba merchants from using payment processing and settlement services to facilitate the sale and importation of prohibited products into the United States;” said the DOJ.
The deal comes at a difficult time for Alibaba in Washington. Alibaba made the anthropic accusation last month Claude, the largest distillation campaign it has ever disclosed, used about 25,000 fake accounts and about 29 million exchanges to extract opportunities from its AI model. There is also Alibaba He sued the Pentagon to remove itself from the list of Chinese military companies, this designation has already been requested several lobbying firms to cut ties with the company.
Alibaba said in a statement that regulation will bring “stricter enforcement of sales of products in the United States by third-party merchants on e-commerce platforms.” The $600 million fine is one of the largest fines the DOJ has secured against a Chinese tech company for platform compliance failures, adding another front to the regulatory pressure Alibaba faces as it tries to protect its business ties in the US.
