Chinese giant Temu accused of breaching EU digital rules

BRUSSELS (AFP): The European Union accused on Monday Chinese-founded online shopping giant Temu of breaking the bloc’s stiff digital rules by not “properly” assessing the risks of illegal product sales through its platform.

EU regulators believe Temu is not doing enough to protect European consumers from dangerous products and that it may not be acting sufficiently to mitigate risks to users.

“Evidence showed that there is a high risk for consumers in the EU to encounter illegal products on the platform,” the European Commission said in its preliminary finding.

It pointed to a mystery shopping exercise that found consumers were “very likely to find non-compliant products among the offers, such as baby toys and small electronics.”

Wildly popular in the European Union, despite only entering the continent’s market in 2023, Temu has an average of 93.7 million monthly active users across the 27-country bloc.

The EU said Temu’s October 2024 risk assessment was “inaccurate and relying on general industry information rather than on specific details about its own marketplace.”

Temu is under investigation as part of the Digital Services Act (DSA). This comprehensive law requires the world’s largest tech firms to do more to protect European consumers online and better regulate content.

Temu will now be able to respond to the EU regulators’ findings and defend itself, but there is no time limit on how long an investigation may last.

If confirmed to be in breach, the EU can slap a fine on Temu.

Fines under the DSA can go as high as 6% of a company’s total worldwide annual turnover and force it to make changes to address violations.

Launched in October, the EU probe continues to investigate other suspected breaches, including the use of addictive design features that could harm users’ physical and mental well-being, as well as how Temu’s systems recommend content and products.

EU law under attack

The DSA is part of the EU’s reinforced legal weaponry to curb the excesses of Big Tech, with stricter rules for the world’s biggest platforms.

It has faced criticism from the U.S. administration under President Donald Trump.

The Republican-dominated judiciary committee of the U.S. House of Representatives described the DSA in a scathing report as a “foreign censorship threat” on Friday.

Staunch Trump ally, Jim Jordan, committee chair, will meet EU tech sovereignty chief Henna Virkkunen in Brussels on Monday.

There are currently other DSA probes into Chinese online retailer AliExpress, as well as social media platforms Facebook, Instagram, X and TikTok.

The EU also aims to curb the influx of cheap packages that enter the bloc each year, with a proposal under discussion for a 2-euro flat fee per parcel.

Last year, 4.6 billion such packages entered the EU – more than 145 per second – with 91% originating in China. The EU expects the numbers to increase.