EU tech regulatory agency announced on Thursday that it has officially launched an investigation into the Chinese online retailer Temu to determine if it has violated the Digital Services Act by selling illegal products, potentially leading to hefty fines for the company.
The investigation will also focus on addictive designs within Temu’s services, including game-like reward schemes and recommending systems promoting their sales to users.
The European Commission has initiated this investigation under the Digital Services Act (DSA), which requires large online platforms like Temu, known as Very Large Online Platforms (VLOP), to take more measures to address illegal and harmful content on their platforms. This action comes in response to complaints from the European Consumer Organization (BEUC) and its 17 member countries.
Fernando Hortal Foronda, BEUC’s digital policy officer, welcomed the news, stating, “Consumer groups have identified many issues related to Temu, such as selling dangerous or illegal products and frequently using design techniques to deceive consumers. The Commission’s decision is a hopeful start, but it’s only the first step.”
Temu has received inquiries from the European Commission regarding the sale of illegal products and addictive designs in both June and October.
Temu has stated that it will cooperate with the regulatory agency’s investigation. As a subsidiary of Pinduoduo, the company has 92 million users across 27 EU countries. Temu also mentioned ongoing discussions to join a voluntary initiative in the EU to combat counterfeit sales.
The EU tech enforcement agency will also investigate if Temu complies with the provisions of the Digital Services Act by granting researchers access to its public data.
Margrethe Vestager, the EU’s competition and tech official, stated, “We aim to ensure Temu complies with the Digital Services Act, particularly ensuring that the products sold on its platform meet EU standards and do not harm consumers.”
If Temu is found to violate the Digital Services Act, it could face fines of up to 6% of its global turnover.
Since the implementation of the EU Digital Services Act a year ago, three Chinese companies have been investigated. Temu, established in 2022, has faced international controversy due to its low-cost dumping strategy and quality issues. Apart from EU countries like Germany, the US, South Korea, and Thailand governments have also initiated investigations into Temu.
In February this year, short video platform TikTok faced an EU Commission investigation for insufficient protection measures for minors; in March, the Commission launched an investigation into potential distribution of illegal and pornographic materials on Alibaba’s AliExpress.
(Reference: Reuters)