The European Union has announced that it is adding Chinese online retailer Temu to its list of platforms facing the bloc’s most rigorous level of digital scrutiny. This move classifies Temu as a “very large online platform” under the EU’s Digital Services Act (DSA), a sweeping regulatory framework designed to enhance online safety and transparency.
With its user base exceeding 45 million, Temu meets the criteria for this classification, which mandates the highest standards of compliance.
Under the DSA, very large online platforms (VLOPs) are required to implement stringent measures to mitigate systemic risks associated with their services.
These measures include tackling the sale of counterfeit goods, unsafe products, and items that infringe intellectual property rights.
By September 2024, Temu must adhere to these obligations, marking a significant milestone in the platform’s operational standards within the EU.
The European Commission, the executive arm of the 27-nation bloc, emphasized the importance of these measures in a recent press release.
“Temu must put in place mitigation measures to address risks such as the listing and sale of counterfeit goods, unsafe products, and items that infringe on intellectual property rights,” the Commission stated.
This includes enhancing user interface for better reporting and detection of suspicious listings, improving moderation processes, and refining algorithms to prevent the promotion and sale of prohibited goods.
Broader Implications and Industry Context
In response, Temu acknowledged the Commission’s decision and expressed its commitment to compliance. “We are fully committed to adhering to the rules and regulations outlined by the DSA to ensure the safety, transparency, and protection of our users within the European Union,” the company said in a statement.
Temu, a subsidiary of PDD Group, has quickly gained traction in Western markets over the past two years, offering a wide range of inexpensive products from apparel to home goods, all shipped directly from China.
This rapid growth has placed it under the EU’s regulatory microscope, making it the 24th company to be designated as a VLOP since the DSA took effect last year.
Temu joins a list of major tech entities, including Facebook, TikTok, YouTube, Instagram, Amazon, and Google Search, all of which are subject to the DSA’s most stringent requirements.
While all online services in the EU must comply with the DSA’s general rules, VLOPs are tasked with additional responsibilities to combat illegal and harmful content. Non-compliance can result in hefty fines, amounting to up to 6% of a company’s annual global revenue.
The inclusion of Temu in this list underscores the EU’s commitment to holding large digital platforms accountable. The DSA, enacted last year, aims to create a safer and more transparent digital environment for users by enforcing strict content moderation and consumer protection standards.
Temu now faces the challenge of integrating these regulatory requirements into its operations.
The company will need to work closely with the European Commission and the Irish Digital Services Coordinator, given that its European headquarters are in Dublin.
Regular risk assessment reports will be required, starting from the initial compliance phase and continuing annually.
This regulatory scrutiny comes amidst increasing complaints from European consumer protection groups, who have raised concerns about Temu’s adherence to the DSA.
The European Consumer Organization (BEUC), representing 45 consumer protection groups across the EU, recently filed a formal complaint against Temu, citing various breaches of the DSA.
This coordinated effort reflects the growing vigilance of consumer advocates in ensuring that large online platforms adhere to EU regulations.
