The Chinese technology company Alibaba, active in e-commerce but also in cloud computing and artificial intelligence, has agreed to pay $600 million to settle a U.S. investigation related to the illegal sale of drugs.
THE SUBJECT OF THE INVESTIGATION
The investigation, conducted by the Department of Justice, concerns alleged violations of the Federal Food, Drug, and Cosmetic Act committed by Alibaba between 2016 and 2024: the law – as explained by U.S. authorities – punishes companies “when their platforms are used to facilitate the illegal sale of pharmaceutical products, related pharmaceutical equipment, and other products prohibited in the United States.”
Alibaba, in a statement, said that the agreement with the Department of Justice will ensure “greater compliance in the sale of products in the United States by third-party merchants” on its e-commerce platforms. The company also admitted “failing to prevent some third-party sellers from evading the controls” required on its marketplace.
Alibaba’s foreign customers used its platforms to make 80,000 purchases of products lacking the authorizations required by U.S. laws on drugs, medical devices, or imports. The total value of these purchases exceeded $200 million.
WHAT ANT GROUP HAS TO DO WITH IT
Also involved in the matter is Aus Merchant Services, a payment management company linked to Ant Group, which is in turn affiliated with Alibaba and mainly known for the financial service Alipay. It admitted that its anti-money laundering program “failed to prevent some Alibaba sellers from using its payment processing services to facilitate the sale and import of products prohibited in the United States.”
Alibaba will pay a criminal fine of $125 million and will be subject to the forfeiture of $200 million. Aus Merchant Services, meanwhile, will pay a fine of $85 million and will be subject to the forfeiture of $190 million.
IT IS A TOUGH TIME FOR ALIBABA IN THE UNITED STATES
Beyond the investigation into the illegal sale of drugs, Alibaba is going through a difficult time in the United States. Last month it was accused by the artificial intelligence startup Anthropic of illegally accessing the Claude model through a series of fraudulent accounts, aiming to “extract” its capabilities and use them to develop a rival chatbot.
Moreover, Alibaba was recently placed by the Department of Defense on a list of companies considered close to China’s armed forces and thus risky for U.S. national security. The Pentagon believes that Alibaba provides technological support to Chinese military operations against American targets, contributes to the “fusion between the military and civilian sectors in favor of China’s defense industrial base,” and shares its technologies with Beijing’s armed forces. Alibaba disputes this account and has sued the Department of Defense to obtain removal from the list.
