EU investigates Chinese online platform Temu for selling illegal products
The European Union has launched an investigation into Temu, a popular Chinese online retailer, for alleged violations of the Digital Services Act.
The investigation could result in significant fines for Temu if the violations are confirmed, including significant fines.
As Temu’s influence has grown, concerns have arisen about its operational practices, particularly its product safety standards, design features of the platform that may encourage addictive shopping behaviour, and data transparency.
The EU investigation came in response to complaints from BEUC, a coalition of European consumer protection organisations, along with 17 national consumer organisations. These complaints highlight several key concerns: the possible sale of illegal or dangerous products, the use of addictive design features that can contribute to compulsive spending, and Temu’s compliance with the DSA’s transparency requirements regarding data sharing with researchers.
These obligations include proactively monitoring, reporting and addressing illegal content, products and harmful activities. The law also mandates transparency in data practices, especially for platforms that significantly influence public opinion and consumer behaviour.
Margrethe Vestager, EU head of technology and antitrust, stressed the importance of compliance with the DSA, especially regarding consumer safety and data accountability. She stated that the EU wants to ensure Temu meets the rigorous standards of the DSA, given the platform’s wide reach and impact across Europe.
According to the DSA, platforms that fail to meet regulatory standards can be fined up to 6% of their global turnover. For a large company like Temu, this could amount to millions or even billions of euros, depending on the nature and extent of the violations.
Beyond the financial consequences, Temu may face restrictions on its operations within the EU, potentially limiting its growth and market presence.
The European Commission’s investigation of Temu under the DSA underscores the importance of striking this delicate balance between rapid expansion and regulatory compliance in one of the most critical international markets.
UPDATE:
A statement from Temu released on 4 November said the company was “in discussions to join the “Memorandum of Understanding (MoU) on the sale of counterfeit goods on the Internet… Counterfeiting is an industry wide challenge, and we believe that collaborative efforts are essential to advancing our shared goals of protecting consumers and rights holders.”
Business AM
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