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The EU Takes Action: Commission Launches Investigation into TEMU's Compliance with Digital Services Act

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After preliminary analysis of Temu, the e-commerce platform's risk assessment report and other information gathered, including through cooperation with national authorities, the European Commission has opened formal proceedings to investigate whether Temu may have breached key requirements of the EU's Digital Services Act (DSA). This is a significant development that ...

After preliminary analysis of Temu, the e-commerce platform's risk assessment report and other information gathered, including through cooperation with national authorities, the European Commission has opened formal proceedings to investigate whether Temu may have breached key requirements of the EU's Digital Services Act (DSA). This is a significant development that could have far-reaching implications for other large online platforms operating in the European Union also.

The DSA, which came into force in 2024, aims to create a safer and more transparent online environment. As a "Very Large Online Platform" with over 45 million monthly active users in the EU, Temu must comply with the Act's most stringent obligations.

The Commission's investigation will focus on several areas:

  1. Temu's systems to limit the sale of non-compliant products in the EU, including preventing the reappearance of previously suspended sellers.
  2. The potential risks linked to Temu's addictive design features, such as game-like reward programmes, and the measures taken to mitigate these risks.
  3. Temu's compliance with DSA rules on product and content recommendations, including disclosing the main parameters used.
  4. Temu's adherence to the DSA's data access requirements for researchers.

The Commission's decision to open formal proceedings suggests that Temu may have fallen short in meeting these obligations. Potential breaches could include inadequate controls to prevent the reappearance of previously suspended sellers of non-compliant goods, addictive design features that could harm users' wellbeing, non-transparent product recommendation algorithms, and a failure to provide researchers with the required data access.

The formal proceeding empowers the Commission to take further enforcement actions, if necessary. It also does not preclude any additional steps that may be taken by national consumer protection or market surveillance authorities.

Manufacturers and importers who sell products through Temu or other large online platforms should pay close attention to this case. If the Commission's investigation uncovers DSA violations, it could lead to significant penalties and force Temu to make major changes to its operations. It could disrupt sales channels and require companies to re-evaluate their e-commerce strategies and compliance measures.

By taking this enforcement action, the EU is demonstrating its commitment to ensuring large online platforms uphold their responsibilities under the Digital Services Act. Businesses that rely on these platforms must be prepared to adapt to the evolving regulatory landscape and ensure their own practices align with the DSA's requirements.

Stay tuned for updates as the Commission's investigation progresses. In the meantime, manufacturers and importers should review their compliance procedures and engage with Temu to understand how this case may impact their operations.

Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_24_5622