Chinese online retailer Temu has been fined €200 million ($232 million) for not doing enough to stop the sale of illegal products, European Union tech regulators said on Thursday, May 28, following the first part of a wide investigation.
Further penalties could follow in the coming months as a result of a nearly two-year investigation under the Digital Services Act that requires large online companies to do more to tackle illegal and harmful content on their platforms.
EU regulators investigated Temu following complaints by pan-European consumers’ organisation BEUC and 17 of its national members.
The European Commission, the EU executive, said the company failed to diligently identify, analyse, and assess the systemic risks of illegal products sold on its platform and the resulting harm to consumers in the European Union.
It criticised Temu for not properly assessing how its recommender systems and product promotion programmes by affiliated influencers could amplify the risks of sales of illegal products.
“Temu respects the objectives of the Digital Services Act and the need for clear, consistent rules across the digital economy. However, we disagree with the European Commission’s decision and consider the fine to be disproportionate,” said Temu in a statement.
“The decision relates to our first DSA assessment in 2024 and does not reflect the current state of our systems. Temu engaged constructively with the Commission throughout the process and has since taken further steps to strengthen risk assessment, platform governance, and user protection,” added Temu, which also said it would continue to engage with regulators and that it was considering all its options on the matter.
COMMISSION WILL ASSESS A TEMU ACTION PLAN
The Commission gave Temu until August 28 to deliver an action plan that regulators will assess, with a decision on whether the company has done enough to comply with the DSA due in two months’ time.
“This is about risk management. It is very much a cornerstone of our DSA,” EU tech chief Henna Virkkunen told reporters. “With this decision we are sending a very strong message to Temu.”
She said regulators will continue their investigation into whether the design of Temu’s service is addictive and the broader assessment of whether it is selling illegal products as well as its recommenders’ and researchers’ access to data.
Companies face fines of as much as 6% of their global annual turnover for DSA breaches.
The Temu penalty is the second under the DSA, after Elon Musk’s social media network X was fined €120 million last December.
Source: Reuters
