The European Union has launched a formal investigation into Temu, the fast-growing e-commerce platform owned by Chinese company PDD Holdings Inc., over concerns the platform isn’t doing enough to combat illegal products on its site, Bloomberg reports.
The European Commission, the EU’s executive arm, suspects Temu may be violating the bloc’s new Digital Services Act (DSA), a landmark law aimed at tackling illegal content and disinformation online. If found in breach, Temu could face a hefty fine of up to 6% of its annual revenue.
The probe also extends to Temu’s transparency and data access practices, and the commission is concerned about the company’s alleged use of addictive features to keep users engaged.
Temu has denied any wrongdoing, emphasizing its commitment to complying with the DSA and safeguarding consumer interests. In a statement, the company said it will cooperate fully with regulators and is in discussions to join a voluntary agreement facilitated by the commission to fight counterfeit products online.
This investigation is part of a wider crackdown by the EU on large tech companies under the DSA. Other platforms currently facing DSA proceedings include Meta Platforms Inc., Alibaba Group Holding Ltd.’s AliExpress, Bytedance Ltd.’s TikTok, and Elon Musk’s X Corp.
Temu’s rapid rise in popularity, fueled by its “Shop Like a Billionaire” Super Bowl ad and its focus on flash sales, low prices, and gamified features, has drawn the attention of regulators.
The commission’s investigation follows an October 11 request for data from Temu on how it tackles counterfeit and unsafe products. The EU is seeking “detailed information and internal documents on the mitigation measures taken against the presence and reappearance of traders selling illegal products” on the platform.
