by Key Takeaways
- Temu may have violated the Digital Services Act (DSA), according to the EU’s investigation.
- The utilization of addictive features, transparency, and the sale of illicit goods are the main topics of the investigation.
- If Temu is found to be in violation, it may be fined up to 6% of its yearly income.
To evaluate possible violations of the Digital Services Act (DSA), the European Commission has opened a formal inquiry into Temu, a Chinese e-commerce platform.
Determining whether Temu has been proactive in stopping the sale of illicit goods on its platform is the goal of the investigation, which was revealed on October 31.
Apart from the purported selling of illicit goods on its site, Temu’s operations will be closely examined for its use of addictive elements that can encourage extended user involvement, its lack of control over rogue sellers, and its problems with data transparency for academics.
The inquiry is in line with the EU’s heightened scrutiny of significant tech companies under the DSA and comes after the Commission requested specific information from Temu on how it handles dangerous and counterfeit goods on October 11.
As a result of this investigation, Temu is currently under regulatory review alongside several other businesses, including Meta, TikTok, Elon Musk’s X, and AliExpress. Temu can be fined up to 6% of its yearly income if it is discovered to be in violation of DSA requirements.
Since its September 2022 launch, Temu has quickly gained notoriety and is now competing with e-commerce behemoths like Amazon. Temu and Pinduoduo are owned by PDD Holdings, which overtook Alibaba in May to take the top spot in China’s e-commerce rankings by market value.
Temu has a substantial user base in the US, particularly among Gen Z, and has around 235 million downloads globally. Its success is attributed to its extremely inexpensive prices and wide selection of products.
EU officials are closely examining Temu’s operational conformity with European norms as a result of their concerns about its rapid expansion.
In May, the Commission designated Temu as a Very Large Online Platform (VLOP) under the Digital Services Act (DSA) due to its 45 million monthly active users in the EU.
Temu was given a four-month window until the end of September 2024 to comply with the Digital Services Act (DSA) as a result of that categorization.
