EU Commission initiates DSA proceedings against Temu
The Chinese marketplace is suspected of not doing enough against illegal products and not protecting users enough.
(Image: Markus Mainka/Shutterstock.com)
The EU Commission, as the competent supervisory authority, has today opened official proceedings against the Chinese marketplace Temu under the Digital Services Act (DSA). The Commission suspects the "particularly large platform" of not complying with all the rules of the DSA. There are three main allegations at the heart of the current investigation.
The main problem from the EU Commission's point of view is that the Chinese marketplace operator is growing rapidly, but has not sufficiently implemented important measures to limit risks. "We want to ensure that Temu complies with the Digital Services Act," says Margrethe Vestager, Vice President of the EU Commission. The aim is to ensure that the provider complies with EU law and does not cause harm to consumers. The Commission would work towards ensuring that all platforms fully comply with European law.
Cosmetics and toys as known problem cases
One specific accusation against Temu is that the fast-growing provider in the EU is not doing enough to combat products that are illegal under EU law. This concerns cosmetics, for example, but also toys and other items. The subject of the proceedings is the question of the extent to which Temu's attempts to exclude illegal products are effective at all. Although Temu blocks illegal products quickly, they would reappear on the marketplace almost as quickly.
If providers do not adhere to the DSA, the liability privilege expires once they become aware of it: If a marketplace is made aware of an illegal product, and it is subsequently traded via this marketplace, those affected can take recourse against the operator in the event of problems if the operator's measures against the sale of such products were ineffective.
It is not to be expected that no products will be offered that do not comply with EU standards. But Temu must do more to prevent this and meet the industry standard, according to Commission circles.
The second accusation is aimed at influencing users on the platform: the Commission sees a substantiated suspicion that Temu is misleading its users into harmful behavior, for example through reward programs and insufficient options for algorithmic sorting. A third accusation is that Temu does not grant researchers access to generally public data on the platform in accordance with the regulations, but the DSA also demands this.
Outcome of the proceedings depends on Temu
In the proceedings, the EU Commission can request statements from the operator, but can also have internal data seized or, for example, question employees of the company. So far, Temu has shown itself to be generally cooperative after the first inquiries under the DSA were sent to the company in the summer. However, the abuses have not yet been sufficiently addressed, according to Commission circles. The DSA does not stipulate a deadline by which the allegations must be clarified - however, according to people familiar with the matter, it is also in the provider's interest to make progress as quickly as possible. Temu has been considered a "very large online platform" (VLOP) since May and is therefore subject to stricter obligations than small marketplaces. Further aspects can be added to the procedure at any time.
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If the suspicions are confirmed, Temu could either commit to changes or be subject to penalties under the DSA. Penalties under the DSA can amount to up to six percent of annual global turnover. The EU Commission has already initiated proceedings against other marketplace operators such as AliExpress.
In the ongoing political debate about potential problems with marketplace operators, the DSA is just one of several relevant EU regulations. However, it is hoped in Brussels that the obligations associated with it will make a significant contribution to addressing other problem areas such as market surveillance for regulated products or customs issues.
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