European Commission Launches Investigation Into Temu

The European Commission has opened a formal investigation into Temu, the rapidly expanding Chinese e-commerce platform, to determine potential violations of the Digital Services Act (DSA). Announced on October 31, the inquiry is part of the EU’s broader push to ensure that major online platforms operate safely, transparently, and in compliance with European standards.

The investigation is focused on evaluating whether Temu has taken proactive steps to prevent the sale of illegal goods, maintained control over third-party sellers, avoided manipulative engagement features, and provided adequate data transparency for researchers and regulators.

Scope and Focus of the Investigation

Temu’s practices are under scrutiny in multiple areas:

1. Sale of Illegal Goods: Regulators want to confirm whether Temu has effectively blocked counterfeit or unsafe products from being sold on its platform.

2. Addictive Platform Features: The EU is examining whether Temu employs design features that encourage prolonged user engagement, which could be considered manipulative.

3. Rogue Sellers: The platform’s oversight mechanisms for third-party sellers are being analyzed to ensure fraudsters or illegal actors cannot exploit Temu’s marketplace.

4. Data Transparency: Academics and regulators require access to platform data to monitor compliance and study user behavior, and Temu’s provision of this data is being evaluated.

This investigation reflects the EU’s commitment to enforcing the DSA, which aims to hold large online platforms accountable for user safety, content moderation, and responsible operation.

Timeline of Temu’s Regulatory Review

The inquiry follows a previous request from the European Commission on October 11, asking Temu to submit detailed documentation on its handling of hazardous and counterfeit goods. Temu now joins other major platforms under EU scrutiny, including Meta, TikTok, X (formerly Twitter), and AliExpress.

If found in violation of the DSA, Temu could face fines of up to 6% of its global annual revenue, underscoring the seriousness of non-compliance.

Temu’s Rapid Growth and Market Position

Since its launch in September 2022, Temu has grown into a major player in the global e-commerce market. Owned by PDD Holdings, the same company behind Pinduoduo, Temu has disrupted traditional online shopping by offering extremely low prices and a wide selection of products.

Temu’s rapid expansion has made it particularly popular with Gen Z consumers in the United States, and the platform has recorded approximately 235 million downloads worldwide. Its low-cost pricing strategy and diverse product catalog have helped it compete with established e-commerce giants like Amazon.

The EU’s investigation into Temu highlights concerns about whether such rapid growth may come at the expense of regulatory compliance and consumer safety.

Classification as a Very Large Online Platform (VLOP)

In May 2024, Temu was designated a Very Large Online Platform (VLOP) under the DSA framework, based on its 45 million monthly active users in the EU. This designation carries specific obligations:

• Platforms must prevent the sale of illegal goods and implement strict oversight of third-party sellers.

• VLOPs must maintain transparent reporting mechanisms for regulators.

• Platforms are expected to prioritize user safety, including monitoring for manipulative engagement features.

Temu was given a four-month period, ending September 2024, to align its operations with DSA requirements. Failure to comply could result in fines and additional regulatory actions.

Why the EU is Scrutinizing Temu

Several factors have prompted the EU to closely examine Temu:

1. Rapid Expansion: Platforms that scale quickly may bypass important safety checks, creating potential risks for consumers.

2. Cross-Border Operations: As a Chinese platform operating internationally, Temu faces the challenge of adhering to multiple regulatory frameworks simultaneously.

3. Consumer Protection: Ensuring that consumers are shielded from counterfeit products, unsafe goods, and fraudulent sellers is a key EU priority under the DSA.

4. Data Responsibility: Platforms must provide transparent data access for researchers and regulators to maintain public trust and ensure legal compliance.

The investigation into Temu is part of a larger EU initiative to ensure that all major e-commerce platforms, especially those expanding quickly, adhere to European standards.

Temu Compared to Other VLOPs

Temu’s regulatory review places it in the company of other high-profile VLOPs:

• Meta – Examined for user data handling, content moderation, and platform transparency.

• TikTok – Scrutinized for algorithmic content, privacy practices, and user safety.

• X (formerly Twitter) – Investigated for platform governance, misinformation, and compliance with DSA rules.

• AliExpress – Evaluated for counterfeit goods and seller oversight in Europe.

By including Temu, the EU demonstrates that rapidly growing platforms outside Europe are subject to the same rigorous standards as established multinational tech companies.

Consumer and Seller Implications

For consumers, the inquiry could result in safer shopping experiences, as platforms would be required to:

• Remove illegal and counterfeit products

• Implement robust seller oversight

• Increase transparency and accountability

For sellers, especially legitimate merchants, compliance with DSA rules could mean clearer regulations and reduced risk of fraud, ensuring a more stable marketplace.

Temu serves as a key test case for the EU, demonstrating how large international platforms can operate within Europe’s regulatory framework while maintaining user engagement and market growth.

Potential Consequences for Temu

If Temu is found non-compliant with the DSA, the platform could face:

• Financial penalties of up to 6% of annual global revenue

• Mandatory operational changes to improve safety, transparency, and user oversight

• Ongoing EU monitoring, affecting how the platform conducts business in Europe

Temu’s handling of this investigation may set a precedent for international e-commerce compliance, influencing how other fast-growing platforms operate in Europe.

Looking Ahead

As Temu continues its global expansion, the DSA investigation underscores the importance of compliance, safety, and transparency. Regulators, users, and international stakeholders are watching closely to see whether Temu will:

• Strengthen controls over illegal goods

• Limit addictive or manipulative engagement features

• Enhance oversight of third-party sellers

• Ensure data transparency for research and regulatory review

Addressing these concerns effectively could help Temu cement its credibility in the EU and support long-term growth.

Conclusion

The European Commission’s investigation into Temu marks a critical regulatory moment for international e-commerce. Temu, one of the fastest-growing online marketplaces globally, is being evaluated for compliance with the Digital Services Act, particularly regarding illegal goods, addictive features, and platform transparency.

While fines and operational mandates are possible, the inquiry also represents an opportunity for Temu to demonstrate regulatory compliance, strengthen trust with consumers and regulators, and model responsible growth in global e-commerce.

For consumers and industry observers, the investigation emphasizes the importance of accountability and safety in digital marketplaces, particularly as platforms rapidly expand across borders.

As Temu navigates this regulatory landscape, its response could shape the future of e-commerce governance and highlight the significance of responsible platform management under the DSA.