The Chinese e-commerce group Alibaba has agreed to pay $600 million to settle allegations by US authorities that its platforms were used to funnel illegal drugs and drug-making equipment to buyers in the United States.
The settlement
The agreement, announced by the US Department of Justice, resolves allegations against Alibaba and AUS Merchant Services, a US-based payment processor, according to the Justice Department. Both companies entered non-prosecution agreements — an arrangement that settles the claims and imposes penalties without a criminal conviction or a formal admission of guilt.
The $600 million is split between the two firms. Alibaba agreed to a criminal penalty of $125 million and to forfeit a further $200 million, while AUS agreed to an $85 million penalty and to forfeit $190 million.
The allegations
Prosecutors said the companies failed to prevent violations of the US Federal Food, Drug, and Cosmetic Act. According to the Justice Department, third-party sellers used Alibaba's platforms — Alibaba.com and AliExpress.com — to make roughly 80,000 prohibited sales to US buyers, with a combined value of more than $200 million, between January 2016 and December 2024.
The goods, prosecutors alleged, included unapproved and misbranded pharmaceuticals, regulated chemicals, and pill presses — machines used to manufacture tablets, including counterfeit pills. Investigators said sellers found ways around the platforms' controls, in some cases steering buyers off the site to complete transactions, the South China Morning Post reported.
Alibaba's response and what comes next
Alibaba described the resolution in measured terms, saying it was committed to strong standards of control against non-compliant sales on its platforms. Under the agreements, the companies are required to strengthen their compliance systems — including better screening of merchants and monitoring of transactions — and to submit to independent oversight for a period of years.
The case reflects a broader push by US authorities to hold online marketplaces responsible for illegal goods sold by third parties on their sites, an area where regulators have increasingly argued that platforms cannot simply disclaim knowledge of what their sellers offer. For Alibaba, one of the world's largest e-commerce companies, the settlement draws a line under a long-running US investigation, at the cost of a substantial payment and tighter scrutiny of how its platforms are policed.
The allegations were resolved without the companies admitting wrongdoing, and the non-prosecution structure means no criminal charges will proceed so long as the terms are met.
