Online platform Temu under fire for selling prohibited items, as EU lodges allegations
The European Union (EU) is currently investigating Temu, a popular Chinese online retailer, for suspected breaches of the Digital Services Act (DSA). The DSA, part of the EU's reinforced legal weaponry to curb the excesses of Big Tech, is designed to ensure online platforms prioritize user safety and protect consumers from harmful practices.
Non-compliant and Illegal Products
The European Commission has found evidence of a high risk for consumers in the EU to encounter illegal products on the platform Temu. The Commission believes that Temu is not doing enough to protect European consumers from dangerous products. The investigation has revealed that Temu inadequately assesses and mitigates risks linked to illegal or unsafe products on its platform, including non-compliant items such as unsafe baby toys and electronics that do not meet EU standards. This exposes consumers to significant risks.
Addictive Design Features
Regulators are also scrutinizing Temu’s use of potentially addictive app design elements that could harm users' physical and mental well-being. These design choices aimed at increasing user engagement may exploit addictive behaviors.
Content and Product Recommendation Systems
There are concerns about Temu’s algorithms recommending content and products to users. These recommendation systems are under scrutiny for potentially promoting overconsumption or misuse, potentially violating DSA rules focused on transparency and user protection.
In addition to these concerns, the Commission has highlighted issues with misleading discounts, fraudulent reviews, and insufficient vendor information, which further exacerbate consumer risks on Temu’s platform.
Potential Penalties
If breaches of the DSA are confirmed, Temu could face fines up to 6% of its worldwide annual turnover and be required to alter its practices to comply with EU law.
Temu has said it will continue to cooperate fully with the commission. No specific statement was made about the outcome of the discussion regarding the DSA or its probes.
Global Investigations
The EU is conducting probes into Chinese online retailer AliExpress, social media platforms Facebook and Instagram, and other platforms in addition to Temu. The EU's October 2024 risk assessment of Temu was deemed inaccurate and relied on general industry information rather than specific details about its own marketplace.
The investigation into Temu comes as the EU seeks to crack down on cheap packages that flood into the bloc each year. A proposal for a two-euro flat fee per parcel is under discussion.
The DSA faces criticism from some quarters, with the Republican-dominated judiciary committee of the US House of Representatives describing it as a "foreign censorship threat". However, a meeting between Jim Jordan, a staunch President Donald Trump ally, and EU tech sovereignty chief Henna Virkkunen in Brussels resulted in a constructive discussion on promoting digital innovation, AI, and regulating the field smartly.
In conclusion, the EU's investigation into Temu underscores its commitment to protecting consumers online and ensuring that platforms adhere to strict safety and transparency standards. The outcome of this investigation will have significant implications for Temu and the online retail industry as a whole.
Technology, as a key aspect of Temu's operations, is under scrutiny for potentially addingictive app design elements (that could harm users' physical and mental well-being) and questionable product recommendation systems (which may promote overconsumption or misuse, potentially violating DSA rules focused on transparency and user protection). If breaches of the DSA are confirmed, penalties could include fines up to 6% of Temu's worldwide annual turnover, and the requirement to alter its practices to comply with EU law.
