European Commission’s Action
The investigation comes just five months after Temu was listed among “very large online platforms” that are required to undergo stricter scrutiny under the EU’s Digital Services Act (DSA). This regulatory framework is designed to ensure safer online environments for users while imposing hefty penalties for non-compliance.
Margrethe Vestager, the European Commission’s Executive Vice President, emphasized the Commission’s commitment to upholding consumer safety and compliance with EU standards. “We want to ensure that products sold on Temu meet EU standards and do not harm consumers,” she stated. The inquiry will assess whether Temu is taking adequate measures to crack down on “rogue traders” selling non-compliant goods, a growing concern amid reports of sellers rapidly re-emerging after being suspended.
Temu’s Response
In response to the investigation, Temu reiterated its commitment to fulfilling its obligations under the DSA, stating that it continually invests in strengthening its compliance systems to protect consumer interests on its platform. The company assured regulators of its cooperation, aiming to support the shared goal of maintaining a safe and trustworthy marketplace.
Additional Areas of Scrutiny
Beyond the sale of illegal products, the Commission is also examining the potential risks associated with Temu’s “addictive design,” which includes game-like reward systems. The investigation will explore what measures Temu is implementing to mitigate these risks.
Additionally, the company is under scrutiny for two other DSA requirements: providing researchers access to data and ensuring transparency in its recommendation systems. This entails a detailed explanation of how products and content are recommended to users, as well as offering users at least one alternative to receive recommendations not based on their personal profiles and preferences.
Broader Regulatory Landscape
Temu’s challenges are compounded by its ongoing scrutiny in the United States, where a congressional report last year accused the platform of failing to prevent the sale of goods made with forced labor. The EU’s investigation is part of a broader trend of increasing regulatory oversight of technology companies since the DSA came into effect last year. The Commission has also initiated inquiries into other e-commerce platforms, such as AliExpress, and social media sites like X (formerly Twitter) and TikTok.
As the investigation progresses, Temu will have the opportunity to respond to the Commission’s findings, which could lead to potential fines or a resolution of the case if the suspicions are unfounded. The outcome of this investigation could have significant implications for Temu’s operations in Europe and beyond.
