By initiating a formal inquiry into the Chinese e-commerce platform Temu under the Digital Services Act (DSA), the European Union has increased its inspection of online marketplaces. The move, which was announced on Thursday, gives EU authorities more authority to monitor Temu. This is mainly because of worries about the sale of illicit goods, such as potentially dangerous toys and cosmetics that don’t adhere to EU regulations. The platform’s gamified purchasing experience, the openness of its recommendation systems, and researcher access to public data are other concerns being examined.
Pinduoduo, Temu’s parent business, may be fined up to 6% of its yearly worldwide revenue if the probe reveals infractions. Regulators acted quickly after Temu was previously designated by the EU to adhere to the strictest DSA criteria back in May. The compliance requirements went into force this month.
Digital Services Coordinators (DSCs) and consumer protection organizations throughout member states are alarmed by Temu’s explosive expansion since its introduction last year. This study is the first to be started using the information from these DSCs. Customs officials and market monitoring groups have also voiced concerns about Temu’s compliance.
Concerns about Temu’s risk assessment were brought to light by the Commission, which called it “too generic.” Authorities are especially concerned about the rise of “rogue traders” and the reemergence of illicit products on the platform after they have been removed. Regulators are also looking at Temu’s design elements that could be detrimental to users’ well-being, like gamified incentive schemes and endless scrolling.
Temu responded by saying it is dedicated to working with regulators and takes its DSA responsibilities seriously. The business is also considering joining a memorandum that aims to fight online counterfeit goods, highlighting the necessity of teamwork in order to safeguard consumers and rights holders.