00:00 Intro
00:18 "1 Trillion Won for Selling Toys?"... EU Strikes Back at AliExpress
01:30 Furious China Asks "Are You Building a Digital Wall?"
03:48 US Is No Exception... From Google and Apple to Meta
05:24 Europe's Version of "Isolationist Policy"... Why There Is No YouTube
This is Paris. Today, we are going to talk about war, specifically the trade war. Europe right now is practically a battlefield. While an actual war is raging in Ukraine, trade and economic wars are also being fought on all fronts. Although no weapons are drawn, the atmosphere feels truly fierce and desperate.
1. "1 Trillion Won for Selling Toys?"... EU Strikes Back at AliExpress
This week, the EU slapped Alibaba with a hefty fine. It amounts to 550 million euros, which is over 900 billion won in our currency. Depending on the exchange rate, it is close to 1 trillion won. The reason stated by the EU is as follows: AliExpress sold unsafe children's toys, hazardous cosmetics, and illegal and counterfeit goods to European consumers. It also noted that while these products were being distributed in massive quantities, sufficient measures were not taken. The EU also disclosed a piece of concrete evidence, stating that internal AliExpress documents showed the company itself was aware that 15 million items on the European market had been mistakenly or illegally recommended. Yet, it failed to secure enough inspection personnel, and existing staff were reportedly so overworked that they could not properly screen the items. Consequently, a fine close to 1 trillion won was imposed. The law applied here is the Digital Services Act, commonly referred to as the DSA. Enacted in 2022 and enforced in 2023, this is the largest fine ever levied under this law. At a glance, one might wonder if the issue warrants such a heavy penalty.
2. Furious China Asks "Are You Building a Digital Wall?"
China immediately reacted with fury. AliExpress protested that it had made efforts to filter out problematic products, but Europe ignored those efforts, adding that it would appeal and fight legally. The Chinese government was also incensed. The Ministry of Commerce released an official statement saying, "We are extremely dissatisfied with this fine and express our serious concerns." And this part is crucial. It criticized Europe for building a "digital wall" in the European market under the pretext of monitoring and regulating platforms. As mentioned earlier, the law applied in this case is the DSA. Briefly explaining this law, the DSA stands for the Digital Services Act. It aims to protect internet shopping consumers from harm and safeguard individuals suffering from damages caused by social media, fake news, and personal data leaks. However, since the creation of this law, not only AliExpress but also Temu and Shein have taken hits. Temu faced nearly identical grounds; because Temu failed to filter out cosmetics and children's toys, it was slapped with a 200 million euro fine this year, equivalent to about 300 billion won. Shein is currently under investigation for similar reasons. The problem is that this law carries extremely steep fines. Penalties can reach up to 6 percent of global sales. Although the issues were identified within the European market, the fines are calculated based on global revenue. Of course, the maximum penalty is not always fully applied. In the case of AliExpress, if the full 6 percent fine had been levied, penalties could have reached up to 12 trillion won. That standard is precisely why such a massive fine close to 1 trillion won was possible. AliExpress, Shein, and Temu were reined in using this law, and another major e-commerce platform remains: JD.com. Europe took issue with JD.com's acquisition of a German company. Under a somewhat unfamiliar term called the Foreign Subsidies Regulation, or FSR, simply put, JD.com merged with a European company by receiving subsidies from the Chinese government. This is the first time the FSR regulation has been invoked to raise issues and launch an investigation. In effect, Europe is currently investigating or has imposed massive fines on all major Chinese online e-commerce platforms.
3. US Is No Exception... From Google and Apple to Meta
Let us circle back to the "digital wall" issue mentioned earlier. While Europe puts forward fair trade order and consumer protection as its justification, it is desperately anxious to block foreign platform companies. Thus, it has been rushing to curb US platform companies for a long time, just as it did with China. Back in 2018, Europe already imposed a massive 7.67 trillion won fine on Google for market dominance of its Android operating system. This week, eight years later, it slapped Google with another 1.5 trillion won fine. This penalty was issued because Google used its platform to promote its own products. Is Google the only target? Apple has already been hit with an 800 billion won fine, Meta with 3200 billion won, and X with 200 billion won. Meanwhile, Amazon is currently undergoing another investigation, which will likely bring further fines. Major US platform corporations have been hit so hard that almost none have escaped penalties in Europe. Ultimately, the reason boils down to one thing: US and China platform enterprises dominate the market, hindering, disrupting, and threatening the establishment of fair competition. This justification holds some validity. Without looking far, we can observe Korea's Coupang. After absorbing enormous deficits and pouring massive funds over several years to dominate the market and become the top platform, even when problems arise, the government cannot properly intervene. Coupang is doing just that right now. Although it is practically as if these corporations have already devoured the European market, Europe sees no other alternatives if it surrenders entirely without a fight, driving them to desperately impose fines and regulations.
4. Europe's Version of "Isolationist Policy"... Why There Is No YouTube
Let us pivot and alter the question slightly here. If there had been global platform companies originating from within Europe—companies akin to Europe's own Instagram, YouTube, or Amazon—would Europe have enacted such laws today? One has to wonder if they would have permitted the enactment of such legislation 160 years ago if they possessed top-tier platform corporations, unlike when foreign powers sailed warships up to Ganghwado Island in Joseon and opened fire to coerce the opening of ports. In fact, Europe failed to foster its internal enterprises during the explosive growth period of platform companies throughout the COVID-19 pandemic. Amid the influx of US and Chinese platform companies, Europe failed to scale up and defend itself. As the gap widened further over time, making it increasingly difficult to cultivate corporations equipped to counter them, Europe ultimately ended up shutting its doors and rushing to erect barriers. It looks virtually indistinguishable from pursuing an isolationist policy, much like Heungseon Daewongun did in the late Joseon Dynasty. The greed of global platform corporations is undeniably problematic and a target that requires continuous restraint. However, Europe's belated defense of its home turf—despite possessing sufficient markets and capital power yet failing to build its own capabilities—suggests that the likelihood of success relying solely on fines and regulations does not appear very high.
(Reported by Kwon Young-in | Produced by Kim Soo-hyung | Video reporting by Kim Si-nae | Video editing by Hong Jin-young | Design by Yook Do-hyun | Produced by SBS Digital News)
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