EU puts Temu to the test: Investigation into illegal sales launched

The European Union has initiated a formal investigation against the e-commerce platform Temu to examine whether the company is taking sufficient measures to combat illegal products on its website. The focus is on the suspicion that Temu is violating the new Digital Services Act. If the suspicion is confirmed, a fine of up to 6 percent of annual revenue could be imposed. Additionally, the European Commission is examining the transparency and data access of Temu as well as the alleged use of addictive features intended to bind users to its offerings. The potential presence of illegal and potentially dangerous products on the platform is concerning, while the company does not appear to be taking sufficient action against questionable providers. Temu has stated its intent to cooperate fully with regulatory authorities and emphasized its commitment to complying with the Digital Services Act. The company continues to invest in improving its compliance system and is working with the Commission to establish a voluntary agreement to combat counterfeits. Temu is part of a group of large technology companies targeted by the EU in its role as a global technology regulator. Meta Platforms, Alibaba's AliExpress, Bytedance's TikTok, and Elon Musk's X Corp. are also subjects of ongoing DSA proceedings. During the investigation, Temu has the opportunity to address the Commission's concerns and avert potential penalties. The investigation follows an EU request on October 11 for Temu to provide data on its handling of counterfeit or unsafe products. The Commission at that time demanded detailed information and internal documents regarding measures to mitigate illegal products on Temu. Since its launch by PDD Holdings, Temu has experienced rapid growth, buoyed by a "Shop Like a Billionaire" Super Bowl advertisement in 2023, which quickly made it one of the most downloaded apps in the U.S. The platform captivates consumers worldwide with flash sales and playful features.