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Chinese technology and e-commerce giant Alibaba has agreed to pay $600 million to settle a US investigation into allegations that it failed to prevent the sale of illegal drugs, chemicals and pharmaceutical counterfeiting equipment through its online marketplaces, marking the latest legal challenge for the company in the United States.
The settlement, announced by the US Department of Justice (DOJ), also covers Alibaba’s US-based payment processor, AUS Merchant Services, which was accused of failing to stop merchants from using its payment services to facilitate illegal transactions.
The companies entered into separate non-prosecution agreements to resolve allegations that they violated the US Federal Food, Drug, and Cosmetic Act by failing to prevent merchants from selling and importing illegal drugs, chemicals and pill presses into the United States through Alibaba’s e-commerce platforms.
As part of the agreement, Alibaba and AUS Merchant Services accepted responsibility for the conduct of their officers and employees and agreed to strengthen their compliance programmes to prevent the sale of prohibited products.
“This settlement reflects a thorough regulatory process with Alibaba’s full cooperation and our commitment to best-in-class standards of control, policies and measures against non-compliant product sales,” Alibaba said in a statement.
What the US investigation found
According to the Justice Department, Alibaba admitted that between 2016 and 2024 it failed to prevent approximately 80,000 sales of illegal chemicals, drugs and pharmaceutical counterfeiting equipment that were shipped from overseas into the United States.
Those transactions had a combined merchandise value exceeding $200 million, the department said.
Federal investigators also carried out more than 40 undercover purchases of illegal pharmaceuticals and pharmaceutical counterfeiting equipment during the probe, demonstrating that prohibited products remained available on the company’s platforms despite internal compliance measures.
The Justice Department alleged that Alibaba employees had, on several occasions, raised concerns internally over whether illegal products were being sold and whether the company’s compliance systems were sufficient to stop such sales.
Authorities further said AUS Merchant Services maintained an inadequate anti-money laundering compliance programme, allowing certain merchants to process payments linked to the sale and import of prohibited products into the United States.
“Today’s resolution reflects the Department of Justice’s commitment to ensuring that companies operating e-commerce and digital payment platforms keep illegal, unapproved, misbranded and dangerous foreign pharmaceuticals off their marketplaces,” Assistant US Attorney General Brett Shumate said in a statement.
Latest US setback for Alibaba
The settlement adds to a series of regulatory and legal challenges Alibaba has faced in the United States amid heightened scrutiny of major Chinese technology companies.
Last month, Alibaba sued the US government after the Pentagon added the company to
its blacklist of firms allegedly linked to China’s military. The company rejected the allegations, saying it had no military ties and arguing that the designation was unsupported by evidence and damaging to its business.
Although the Pentagon blacklist dispute centres on national security, the latest case focuses on product safety, regulatory compliance and cross-border e-commerce enforcement.
With inputs from agencies.
