Temu under fire from European regulators: Investigation launched over the sale of illegal products

The European Commission today launched an official procedure to assess whether Temu may have violated the Digital Services Act in areas related to the sale of illegal products, the design of services that potentially create addiction, systems used to recommend purchases to users, and access to data for researchers, the Commission announced.

Following the official initiation of the procedure, the Commission will continue to gather evidence, for example, by sending additional requests for information to Temu or third parties or conducting monitoring activities or interviews.

– We want to ensure that Temu complies with the Digital Services Act; especially to ensure that the products sold on their platform meet EU standards and do not harm consumers. Our enforcement will guarantee equal conditions and that every platform, including Temu, fully complies with the laws that make our European market safe and fair for all – stated Margrethe Vestager, Executive Vice President of the Commission responsible for Europe ready for the digital age.

Earlier this month, the European Commission requested that Temu provide information about its activities to combat the sale of illegal items ‘as well as risks related to consumer protection, public health, and user welfare’, reports the Financial Times. Temu provided this information last week, and today the final decision to launch an official investigation was made.

Certain consumer groups have alerted the relevant EU authorities to the high proportion of dangerous products sold by e-commerce platforms Temu, Shein, and many others. These products do not comply with EU safety and consumer regulations and bypass controls by selling directly to consumers.

A recent study of toys sold on Temu and other similar e-commerce platforms revealed that 80 percent of items are toxic or pose a health risk to children. It is worth noting that platforms are not responsible for products sold by other retailers and manufacturers, but they can be scrutinized for failures in monitoring content and goods available to consumers.

Brussels is currently pursuing a rather aggressive policy regarding digital platforms as it seeks to counter the dominance of large online retailers and service providers. The Digital Services Act, adopted in 2022, gives the Commission broad powers to financially penalize large tech companies that do not monitor illegal content on their platforms. Therefore, European regulators have opened official investigations against Meta, AliExpress, TikTok, and X.

It should be noted that Temu, owned by the Chinese company PDD Holdings, was launched in 2022 and has expanded to nearly 50 countries in the past two years, thanks to its ultra-low pricing strategy.

Earlier this year, the Commission designated Temu as a ‘very large online platform’, placing it under greater scrutiny from Brussels. In June, the platform was first asked for more information about its efforts to control the sale of illegal goods, and the same measure was applied to Shein, a fast fashion e-commerce platform also based in China.

Finally, it should be noted that now, after the initiation of the investigation, the procedure against Temu can be dismissed at any time if the company agrees to take stronger measures against the sale of illegal goods.