The Justice Department stated that the investigation looked into whether the companies failed to block the sale and import of illegal prescription drugs and controlled substances.
Investigators from the US Department of Justice, spearheaded by federal prosecutors in Rhode Island, conducted a probe into Alibaba and its payment processing unit, AUS Merchant Services Inc. The investigation determined that between 2016 and 2024, the firms did not stop third-party vendors from leveraging their platforms to sell and bring into the country products that breached the US Food, Drug, and Cosmetic Act and other statutes. Those products included pharmaceuticals, regulated chemicals, and drug counterfeiting equipment.
Charles C. Calenda, first assistant US Attorney in Rhode Island, said the settlement was about "holding companies accountable when their platforms are used to facilitate the unlawful sale of illegal pharmaceuticals, related pharmaceutical equipment and other prohibited products in the United States."
Jarod Koopman, chief of the IRS Criminal Investigation division, added: "As one of the world's largest online retailers, Alibaba has an obligation to safeguard consumers from dangerous and illegal products, and to maintain integrity throughout its payment processes."
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Under the settlement terms, Alibaba signed a non-prosecution deal made public on Wednesday, concluding the inquiry. AUS Merchant Services acknowledged that its anti-money laundering measures were insufficient to stop certain Alibaba sellers from utilizing its payment processing system to enable the sale and import of banned items.
In an emailed statement, Alibaba said it will bring "stricter compliance to the sale of products in the United States by third-party merchants on its e-commerce platforms."
The settlement closes a major legal headache, but does not wipe away all of Alibaba's problems. The company still faces other significant challenges that test its ability to operate smoothly in the US market. This case highlights the growing regulatory pressure on Chinese technology giants expanding globally, requiring them to invest heavily in compliance and legal teams to navigate foreign laws and enforcement actions.
In a separate matter, the AI firm Anthropic PBC alleged that Alibaba conducted a significant campaign to improperly access its Claude AI model via fake accounts in an attempt to create a competing chatbot, as stated in a letter Anthropic sent to US lawmakers and White House officials.
Alibaba also sued the Pentagon to seek its removal from a roster of Chinese military companies. That list has prompted several powerful lobbying firms to cut ties with Alibaba.
These legal entanglements highlight the growing regulatory pressures on Chinese tech giants as they expand internationally, requiring increased compliance and legal resources to navigate foreign laws.
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