A formal investigation was initiated by the European Commission on Thursday into the Chinese e-commerce platform Temu regarding possible violations of the Digital Services Act, which aims to mitigate the spread of illegal and harmful online content.
An initial review indicated that Temu might not adequately address noncompliant products and the risks associated with its platform’s addictive design features, such as reward systems, while also failing to meet transparency requirements.
Earlier this month, the Commission requested additional information from the Chinese company to demonstrate its adherence to European Union regulations, following growing concerns from EU governments and consumer protection groups about the platform’s safety for users.
According to a Commission representative who briefed reporters prior to the announcement, “There is a suspicion that not enough is done, not in an effective way to really prevent the dissemination of illegal products.” They also noted, “We have reasons to believe that Temu didn’t properly analyze the addictive nature” of some of its features.
If the thorough investigation, which does not have a set timeline, uncovers significant violations, companies could incur fines of up to 6 percent of their annual global revenue under the DSA.
Temu, which boasts 92 million monthly users in the EU, was classified as a very large online platform (VLOP) in May, necessitating compliance with stricter rules and direct oversight from the Commission.
A representative for Temu stated that the company “takes its obligations under the DSA seriously, continuously investing to strengthen our compliance system and safeguard consumer interests on our platform” and “will cooperate fully with regulators.”
Chinese online marketplaces, including Temu, fast-fashion retailer Shein, and major seller AliExpress, have come under increasing scrutiny from policymakers and regulators due to concerns regarding dumping practices, forced labor, and environmental impact.
In her political guidelines, the Commission President committed to addressing “challenges with e-commerce platforms to ensure consumers and businesses benefit from a level playing field based on effective customs, tax and safety controls and sustainability standards.”
