New Delhi, July 3 -- WASHINGTON - Inside Alibaba, employees had seen the problem before federal investigators did. Staff at the company's digital commerce divisions raised concerns about inadequate compliance systems and whether illegal pharmaceuticals were moving through its platforms. Years later, the US Department of Justice confirmed they were right. They agreed on a number.

Alibaba avoids a criminal conviction while committing to ongoing compliance obligations and paying a sum larger than the combined revenue of many of its US competitors.

The investigation reached back to 2016. Over roughly a decade, law enforcement from multiple US agencies conducted more than 40 undercover purchases through the platforms, buying prohibited pharm...