EU Commission probes Chinese marketplace Temu under platform rules

The European Commission today began formal proceedings against Chinese online marketplace Temu for a possible breach of the EU’s Digital Services Act (DSA). 

The platform, which was founded by PDD Holdings in 2022, is under investigation in areas linked to the sale of illegal products, the potentially addictive design of the service, such as game-like reward programmes that might encourage addictive behaviour and impact users’ wellbeing, the systems used to recommend purchases to users, as well as data access for researchers. 

The decision comes after Temu was asked to reply to Commission questions in June and October related to measures it has taken against illegal products.  

In addition, the EU executive said it had accounted for information from third parties. In May, European Consumer Organisation’s network (BEUC) filed complaints under the DSA with national regulators and the Commission against Temu for failing to protect consumers and for using manipulative practices. 

The same month, the Commission designated Temu as a Very Large Online Platform (VLOP) under the Digital Services Act (DSA), as it exceeds the threshold of 45 million monthly average users in the EU. Temu last declared 92 million monthly users in September.

Fernando Hortal Foronda, Digital Policy Officer at the European Consumer Organisation (BEUC), said in a statement to welcome the news.

“There are many problems consumer groups have identified with Temu, which include many dangerous or illegal products on sale or the frequent use of design techniques to trick consumers. This decision by the Commission is a promising step, but only the first. Now, it’s important the Commission keeps up the pressure on Temu and pushes the company to comply with the law as soon as possible,” he said. 

The Commission will now continue to gather evidence, and can take further enforcement steps including the adoption of a non-compliance decision, if breaches of the DSA are proven. 

Temu said in a statement that “it takes its obligations under the DSA seriously.”

“We will cooperate fully with regulators to support our shared goal of a safe, trusted marketplace for consumers,” the statement said.

“In a separate development, we can confirm that we are in discussions to join the ‘Memorandum of Understanding (MoU) on the sale of counterfeit goods on the internet,’ a voluntary agreement facilitated by the European Commission,” the company added.

The DSA entered into force in August last year for the largest online platforms, and it became applicable in February to all platforms. The Commission has now designated 25 platforms as VLOPs, including Amazon, Shein, X and AliExpress. It has non-compliance investigations pending against several platforms including Meta and TikTok.