The European Union accused Chinese-founded online shopping giant Temu on Monday, July 28, of breaking the bloc's digital rules by not "properly" assessing the risks of illegal products. EU regulators believe Temu is not doing enough to protect European consumers from dangerous products and that it may not be acting sufficiently to mitigate risks to users. "Evidence showed that there is a high risk for consumers in the EU to encounter illegal products on the platform," the European Commission said in its preliminary finding. It pointed to a mystery shopping exercise that found consumers were "very likely to find non-compliant products among the offer, such as baby toys and small electronics."
Temu has become wildly popular in the EU despite only having entered the continent's market in 2023, and now has 93.7 million average monthly active users in the 27-country bloc.
Temu is under investigation as part of a mammoth law known as the Digital Services Act (DSA) that forces the world's largest tech firms to do more to protect European consumers online and better police content online. The EU said Temu's October 2024 risk assessment was "inaccurate and relying on general industry information rather than on specific details about its own marketplace."
If confirmed to be in breach, the EU can slap a fine on Temu. Fines under the DSA can go as high as 6% of a company's total worldwide annual turnover and force it to make changes to address violations.
Launched in October, the EU probe continues to investigate other suspected breaches including the use of addictive design features that could hurt users' physical and mental well-being and how Temu's systems recommend content and products.
Temu will now be able to respond to the EU regulators' findings and defend itself, but there is no time limit on how long an investigation may last.
The DSA is part of the EU's reinforced legal weaponry to curb the excesses of Big Tech, with stricter rules for the world's biggest platforms. It has faced criticism from the US administration under President Donald Trump.
The Republican-dominated judiciary committee of the US House of Representatives described the DSA in a scathing report as a "foreign censorship threat" on Friday. Staunch Trump ally Jim Jordan, committee chair, will meet with EU tech sovereignty commisioner Henna Virkkunen in Brussels, on Monday.
There are currently other DSA probes into Chinese online retailer AliExpress, social media platforms Facebook and Instagram and X as well as TikTok.
The EU also wants to crack down on cheap packages that flood into the bloc each year, with a proposal under discussion for a €2 flat fee per parcel. Last year, 4.6 billion such packages entered the EU – more than 145 per second – with 91% originating in China. The EU expects the numbers to increase.