Temu, the super low-cost e-commerce marketplace owned by Chinese online retailer Pinduoduo, is to face the European Union’s strictest rules after authorities designated the company a “very large online platform” (VLOP) under the Digital Services Act (DSA).
The news comes some two weeks after European consumer protection groups filed coordinated complaints against Temu over an alleged raft of alleged breaches relating to DSA, and a year after Temu opened its first office in the region. Temu subsequently went on to pass 75 million users in the EU, according to some reports, a figure that sits well above the EU’s 45 million threshold for being classed as a VLOP.
Additional scrutiny
The rules set out under the DSA have applied since February with 19 separate platforms initially subject to additional scrutiny either as a VLOP or very large online search engine (VLOSE), covering products belonging to Alibaba, Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft, and Snap, among others. In December, an additional three porn sites were given VLOP status ahead of the official application date, while Temu’s Chinese retail rival Shein was the first to be designated a VLOP after the rules came into practice.
Temu is now the 24th company to face extra obligations under the DSA, meaning the company will face extra scrutiny over its use of algorithms, AI, content rankings, recommendation tools, and suchlike, while having to assess and mitigate any “systemic risks” that stem from Temu’s services, including addressing counterfeit, illegal or unsafe products listed on its platform.
In mid-May, BEUC — the European consumer organization representing 45 consumer protection groups across the bloc — filed a formal complaint against Temu while requesting that lawmakers designate the platform as a VLOP. In tandem, more than a dozen BEUC member organizations filed complaints with their national consumer protection authorities, accusing Temu of breaching DSA.
And it seems the European Commission has listened.
While the additional rules that apply to VLOPs are officially binding from August for companies that have already been designated as such, Temu will have until the end of September because there is a four-month grace period to comply from the point of notification — starting today.
From that point, Temu will need to work with the Commission and Irish Digital Services Coordinator — Temu’s European HQ is in Dublin — to provide regular risk assessment reports, once at the start, and then on a yearly basis moving forward.
TechCrunch has reached out to Temu for comment, and will update here if or when we hear back.