BRUSSELS: The EU launched a formal investigation on Thursday into Chinese-founded e-commerce platform Temu on suspicion that the site is doing too little to stop the sale of illegal products, in an investigation that could lead to hefty fines.
Extremely popular in the European Union, despite only entering the continent’s market last year, Temu averages around 92 million monthly active users on the block.
The investigation will also look at the risks of the platform’s “potentially addictive design” which could have “negative consequences” on users’ “physical and mental well-being”, the European Commission, the EU’s powerful digital watchdog, said.
The investigation comes under a mammoth law known as the Digital Services Act (DSA) that forces the world’s biggest tech companies to do more to protect European consumers online.
“We want to ensure that Temu complies with the Digital Services Act. In particular by ensuring that products sold on their platform meet EU standards and do not harm consumers,” EU chief technology officer Margrethe Vestager said in a statement.
The EU wants to know more about the systems Temu has in place to “limit the sale” of illegal products as well as how the platform limits their “re-emergence”.
Temu should also explain what measures it takes to address any risks from its service, including game-like reward programs.
Temu said he would cooperate with the EU.
“Temu takes its obligations under the DSA seriously, continuously investing to strengthen our compliance system and protect the interests of consumers on our platform,” said a Temu spokesperson.
“We will fully cooperate with regulators to support our shared goal of a safe, trusted marketplace for consumers,” the spokesperson said in a statement.
Multiple detectors
The EU investigation will also examine Temu’s systems and how they recommend content and products to users, as well as whether the platform complies with the obligation to provide researchers with access to Temu’s publicly available data, the Commission said.
Temu should also provide more details about the “parameters” of its recommendation systems, which are used by platforms to promote more personalized content.
The EU stressed that “the initiation of the formal procedure does not prejudge its outcome” and there is no deadline for the investigation to be completed.
Temu is among the 25 “very large” online platforms that must comply with the DSA or risk fines that could reach up to 6% of their global turnover or even a ban for serious and repeated violations.
Other shopping platforms that must comply with the DSA include Chinese online retailer AliExpress, US giant Amazon and China-founded Shein.
Other DSA investigations targeted AliExpress, social media platform X, which is owned by tech billionaire Elon Musk and was formerly called Twitter, and Facebook and Instagram owned by Meta.
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