China Fumes Over 1 Trillion Won Fine Bomb: "US Is No Exception" — The Real Reason Behind Europe's Fines

This is Paris. Today, let's talk about war — specifically, trade war. Europe right now is literally a battlefield. Aside from the actual war raging in Ukraine, trade and economic wars are breaking out all over the place. They may not be wielding weapons, but the atmosphere feels truly fierce and desperate.
 
This week, the EU slapped a massive fine on Alibaba: 550 million euros, which is over 900 billion won in Korean currency. Depending on exchange rates, it approaches nearly 1 trillion won. The EU stated its reason as follows: AliExpress sold unsafe children's toys, harmful cosmetics, and illegal and counterfeit products to European consumers. It added that while these products were being distributed in large quantities, the platform failed to take adequate measures.

The EU also revealed a specific piece of evidence. It noted that according to internal data from AliExpress, the company itself was aware that 15 million items in the European market were improperly or illegally recommended. Despite this, AliExpress failed to secure sufficient inspection staff and overworked existing personnel, preventing them from properly filtering out such products. That is why a fine close to 1 trillion won was imposed. The regulation applied here is the Digital Services Act, commonly known as the DSA. This represents the largest fine levied under the law since it was enacted in 2022 and took effect in 2023. At first glance, one might wonder if the issue warrants such a penalty.

  China reacted immediately with outrage. First, AliExpress bristled, claiming it had made efforts to filter out problematic items, but Europe ignored those efforts. The company pledged to appeal and fight the decision legally. The Chinese government was equally angered. China's Ministry of Commerce issued an official statement saying, "We are strongly dissatisfied with the imposition of this fine and express our grave concern." And here comes the crucial point: it criticized Europe, claiming that under the guise of monitoring and supervising platforms, it is raising a "digital wall" in the European market.

As mentioned earlier, the law applied in this case is the DSA. To briefly explain, the DSA stands for the Digital Services Act, which aims to protect consumers purchasing goods online and safeguard people from harm caused by social media, fake news, and personal data leaks. However, since its implementation, not only AliExpress but also Temu and Shein have been hit hard. Temu faced penalties for almost the exact same reason; this year, it was slapped with a fine of 200 million euros (approximately 300 billion won) for failing to filter out items like cosmetics and children's toys. Shein is also currently under investigation for similar reasons.

The issue is that the penalties under this law are extremely heavy. It allows for fines of up to 6% of a company's global annual turnover. While the violation is identified within the European market, the fine calculation is based on worldwide revenue. Of course, the maximum penalty is not always imposed. In Alibaba's case, if the 6% cap had been applied fully, the fine could have reached 12 trillion won. The fact that a fine close to 1 trillion won could be levied comes down to this very standard. Having targeted AliExpress, Shein, and Temu under this law, the remaining major e-commerce giant is JD.com. In fact, JD.com has been expanding rapidly in Europe by aggressively acquiring other European online retailers. Europe took issue with JD.com's acquisition of a German company under the Foreign Subsidies Regulation (FSR)—a somewhat unfamiliar term, but simply put, it alleges that JD.com used subsidies from the Chinese government to acquire a European business. This marks the first time the FSR regulations have been invoked to challenge and investigate an acquisition. Virtually all major Chinese e-commerce platforms are currently either under investigation by Europe or have been hit with massive fines.

  This brings us back to the "digital wall" mentioned earlier. While Europe cites securing a fair market order and protecting consumers as its justification, it is desperately struggling to block foreign platform companies. Consequently, long before turning to China, Europe was busy trying to keep American platform companies at bay.


Back in 2018, Europe slapped a staggering 7.67 trillion won fine on Google, claiming its Android operating system was monopolistic. Eight years later, this week, it hit Google again with a 1.5 trillion won fine, accusing the tech giant of using its platform to promote its own products. On top of that, Google's Gemini is under a separate investigation. Is it only Google? Apple has already been hit with an 800 billion won fine, Meta with 320 billion won, and X with 200 billion won. Meanwhile, Amazon is currently being investigated, with another fine likely on the way.

As such, virtually no major US platform company has escaped being penalized in Europe. Ultimately, the reason is simple: US and Chinese platform companies dominate the market, hindering, interfering with, and threatening the creation of a fair competitive market. There is some validity to this justification. One does not have to look far—just look at Coupang in South Korea. After tolerating massive losses and pouring in huge amounts of capital over several years to dominate the market and become the top platform, even the government struggles to rein it in when problems arise. That is what Coupang is doing right now. In Europe, although these companies have essentially swallowed up the market, letting them take over completely seems to leave no way out, which is why Europe is fiercely imposing fines and regulations.
  However, let's reframe the question. If Europe possessed its own global platform giants—a European Instagram, YouTube, or Amazon—would Europe have enacted such laws today? One has to wonder if those who sailed ships off the coast of Ganghwado in Joseon 160 years ago, firing cannons and demanding that the country open its doors, would have allowed such legislation to pass if they owned leading top-tier platform companies.

In truth, during the COVID-19 pandemic when platform companies grew rapidly, Europe failed to foster its domestic companies. Faced with the influx of US and Chinese platform giants, it failed to scale up its own players to defend its market. In the meantime, the gap widened further, making it increasingly difficult to cultivate companies capable of competing. As a result, Europe has ended up frantically closing its doors and building walls. It almost looks as if Europe is pursuing an isolationist policy, not unlike Heungseon Daewongun at the end of the Joseon Dynasty.

The greed of global platform corporations is undeniably a problem and something that must be constantly kept in check. However, for Europe, which had sufficient market size and capital yet failed to build its own capabilities, this belated defense of its home turf seems unlikely to succeed through fines and regulations alone.
 
※ Please note: This article was translated by AI and may contain errors.