European Commission launches investigation into Temu for possibly breaching DSA

The European Commission has officially opened formal proceedings against Temu in order to assess whether the company has breached the Digital Service Act (DSA).

The Chinese online retailer may be linked to the sale of illegal products in the European Union. The European Commission is concerned Temu has taken insufficient measures to prevent the sale of products of ‘previously suspended rogue traders’, as well as adapting its systems to limit the reappearance of non-compliant goods.

In addition, by including game-like reward programs, Temu allegedly designed its service to be as addictive as possible. This in turn could have negative consequences to buyers’ physical and mental well-being.

Furthermore, the European Commission wants to learn more about the recommendation systems Temu uses to recommend products to users.

Lastly, the Commission wants to know if the Chinese shopping giant complies with DSA obligation to give researchers access to Temu’s publicly accessible data.

“We want to ensure that Temu is complying with the Digital Services Act. Particularly in ensuring that products sold on their platform meet EU standards and do not harm consumers. Our enforcement will guarantee a level playing field and that every platform, including Temu, fully respects the laws that keep our European market safe and fair for all,” Executive Vice President Margrethe Vestager says in a statement.

By the end of 2021, the Digital Service Act or DSA was adopted in the European Union. The goal of this legislation is to better protect European consumers and internet users against large and powerful tech companies.

According to the DSA, companies with more than 45 million active monthly users and an annual turnover of €7.5 billion in the EU, are considered ‘Very Large Online Players’ or VLOPs. They are required to do more to combat illegal content as well as counterfeit products on their platforms.

Temu was designated a VLOP in May 2024.

“Temu takes its obligations under the DSA seriously, continuously investing to strengthen our compliance system and safeguard consumer interests on our platform,” the company said in a statement.

If found guilty of breaching the DSA, Temu could face a fine up to 6 percent of its global turnover, which could be several billion euros.