Chinese online retailer Teemo faces an EU investigation over its suspected failure to prevent the sale of illegal products, the European Union’s executive arm said on Thursday.
The European Commission opened its investigation five months after Temu was added to a list of “very large online platforms” needing a strict level of scrutiny under the bloc’s Digital Services Act. It is a wide-ranging rulebook designed to clean up online platforms and keep internet users safe, with the threat of hefty fines.
Temu has only begun entering Western markets in the past two years and has grown in popularity by offering cheap goods — from clothing to household products — shipped from sellers in China. The company, owned by Pinduoduo Inc., a popular e-commerce site in China, now has 92 million users in the European Union.
Temu said it “takes its obligations under the DSA seriously, and is continually investing to strengthen our compliance regime and protect consumer interests on our platform.”
“We will fully cooperate with regulators to support our shared goal of providing a safe and reliable marketplace for consumers,” the company said in a statement.
Brussels wants to ensure that products sold on the Temu platform “meet EU standards and do not harm consumers,” European Commission Executive Vice President Margrethe Vestager said in a press release.
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It said the EU implementation “will ensure a level playing field and that every platform, including Temu, fully respects the laws that keep our European market safe and fair for everyone.”
The committee’s investigation will look into whether Temu’s systems are doing enough to crack down on “rogue traders” selling “non-compliant goods” amid fears they could quickly resurface after being suspended. The committee did not identify specific illegal products sold on the platform.
Regulators are also examining the risks posed by Temu’s “addictive design,” including its “game-like” rewards programs, and what the company is doing to mitigate those risks.
Temu’s compliance with two other DSA requirements is also being investigated: giving researchers access to data and transparency in recommender systems. Companies should make it clear how they recommend content and products, and give users at least one option to see recommendations that aren’t based on their profile and preferences.
Temu now has a chance to respond to the commission, which can decide to impose a fine or drop the case if the company makes changes or can prove that the suspicions are incorrect.
Brussels has been taking strict measures against technology companies since the Digital Services Law came into force last year. It also opened an investigation into another e-commerce platform, AliExpress, as well as social media sites such as X and TikTok, which came under pressure after the commission demanded answers about the new rewards feature.
Timo has also faced scrutiny in the United States, where a congressional report last year accused the company of failing to prevent the sale of goods made with forced labor on its platform.
& Edition 2024 The Canadian Press
