EU Tightens Scrutiny on Chinese Retail Giant Temu Under Digital Services Act

The European Union has added Chinese online retailer Temu to the list of platforms facing its highest level of digital scrutiny under the Digital Services Act. By 2024, Temu must adhere to stringent rules to mitigate risks, such as counterfeit goods and unsafe products, and improve its moderation processes.

The European Union said Friday that it's adding Chinese online retailer Temu to its list of platforms facing the bloc's highest level of digital scrutiny. Because it has more than 45 million users, Temu is being classed as a “very large online platform” under the the EU's Digital Services Act, a wide-ranging rulebook designed to clean up online platforms and keep internet users safe.

That means that by 2024 Temu will be required to obey the DSA's most stringent rules and obligations, which include assessing and mitigating “systemic risks.” “Temu must put in place mitigation measures to address risks, such as the listing and sale of counterfeit goods, unsafe products, and items that infringe on intellectual property rights,” the European Commission, the 27 nation bloc's executive arm, said in a press release. The company could do this by taking measures such as modifying its user interface for better reporting and detection of suspicious listings, improving its moderation processes to swiftly remove illegal items, and refining its algorithms to prevent the promotion and sale of prohibited goods, the commission said. Temu said it “acknowledges'' the commission's decision. “We are fully committed to adhering to the rules and regulations outlined by the DSA to ensure the safety, transparency, and protection of our users within the European Union,” the company said in a statement. Temu started entering Western markets only in the past two years and has grown in popularity by offering cheap goods - from apparel to home products - that are shipped from China.

There are already about two dozen tech names including Facebook, TikTok, YouTube, Instagram, Amazon and Google Search on the EU's list of the biggest online services that need the toughest tier of supervision since the DSA took effect last year. Other online services operating in the EU aren't exempt - they still have to comply with the law's general requirements. Violations are punishable by fines of up to 6 per cent of a company's annual worldwide revenue.