The European Commission launches a formal investigation into Chinese online shopping service Temu for allegedly selling illegal products and designing addictive services
The European Commission announced on Thursday, October 31, 2024 that it has launched a formal procedure to evaluate whether the Chinese online shopping service Temu is suspected of violating the Digital Services Law. The investigation will focus on 'sales of non-compliant products in the EU' and 'additive service design, such as game-like reward programs.'
Commission opens formal proceedings against Temu under DSA
Temu to be investigated by EU tech regulators over sale of illegal products | Reuters
https://www.reuters.com/business/retail-consumer/temu-be-investigated-by-eu-tech-regulators-over-sale-illegal-products-2024-10-31/
The EU has previously requested information from Temu under the Digital Services Act.
China-based discount shopping sites Shein and Temu are required to provide information under the EU's Digital Services Act - GIGAZINE
The European Commission has now laid out four areas of concern in its formal investigation of Temu:
The first issue is the 'sale of non-compliant products in the EU.' The European Commission has stated that there are insufficient measures in place to prevent malicious sellers who have been banned from selling illegal or inappropriate products in the past from reappearing under new accounts. It has also been pointed out that there is an insufficient system in place to prevent illegal or non-compliant products that have been removed from being relisted in a different form.
The second issue was the 'addictive design of the service,' particularly the existence of a gamified rewards program. The European Commission stated, 'The design of Temu's service may have adverse effects on users' physical and mental health, and we will investigate whether appropriate measures to prevent and mitigate these effects have been taken.'
The third issue is 'issues regarding transparency of product recommendation systems and user choice.' The EU's Digital Services Act requires that key parameters used in recommendation systems be disclosed and that at least one option for users to opt out of using recommendations based on personal behavioral analysis be provided in an easily accessible form. However, there are questions about whether these requirements are being met appropriately.
The fourth issue is 'data access for researchers.' The Digital Services Act requires companies to provide researchers with access to public data for research purposes, but Temu is being investigated for its compliance with this obligation.
The European Commission pointed out that the above issues violate Articles 27, 34, 35, 38, and 40 of the Digital Services Act. Based on a risk assessment report submitted at the end of September 2024 and a preliminary analysis of information shared by third parties, the Commission announced that it would formally launch an investigation. As a result of the investigation, Temu will be required to accept the corrective measures proposed by the European Commission or a decision on violation of the Digital Services Act.
'We want to ensure that Temu complies with the Digital Services Act, and in particular that products sold on its platform meet EU standards and do not harm consumers,' Margrethe Vestager, the EU's antitrust and technology commissioner, said in a statement.
·postscript
A Temu spokesperson said in a statement, 'Temu takes its obligations under the Digital Services Act seriously and is continually investing to strengthen its compliance regime and protect consumer interests on its platform. We will fully cooperate with regulators to support our shared goal of a safe and trusted marketplace for consumers. We believe that counterfeiting is an industry-wide challenge and that a coordinated effort is essential to advance our shared goal of protecting consumers and rights holders.'
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