The European Commission has launched formal proceedings to determine whether Chinese marketplace Temu respects the rules of the Digital Services Act (DSA), following complaints about illegal products and the addictive nature of the app.
Malicious sellers
With more than ninety million active users in the European Union, the DSA places Temu into the category of “Very Large Online Platforms”, just like Amazon, Apple, Google and Microsoft. Such companies have to follow strict rules. European Commissioner Margrethe Vestager said the Commission wants to make sure Temu complies with the DSA: “We are checking whether products sold on their platform meet EU standards and are not harmful to consumers.” The Commission wants to ensure a level playing field: each platform must respect the same rules.
Specifically, the EU will investigate whether Temu is taking sufficient action to ban malicious sellers and illegal products. It will also look into the addictive nature of the app: the reward programmes may have negative effects on users’ physical and mental well-being. Furthermore, the investigation will examine how Temu recommends content and products to users.
Unfair competition
Earlier this month, the Commission had already asked the Chinese e-commerce giant for more explanation on what it is doing to stop the sale of illegal products and protect consumer rights. The platform said then that it would cooperate, and that it had already taken several measures. On the other hand, several European consumer organisations accused the retailer of withholding information and using manipulation techniques. A lot of retailers also complain about unfair competition from China.
The Commission can require Temu to make adjustments, and impose sanctions such as a fine of up to 6 % of global turnover – which would mean billions of euros. Earlier this year, the European Commission already opened an investigation into TikTok, which had to withdraw a rewards programme. The Commission also requested information on the algorithms of YouTube, Snapchat and TikTok.
