EU probes shopping app Temu over illegal products

The EU launched a formal investigation on Thursday, October 31, into Chinese-founded e-commerce platform Temu on suspicion the site is doing too little to stop the sale of illegal products, in a probe that could lead to large fines.

Extremely popular in the European Union despite having entered the continent's market only last year, Temu has on average around 92 million monthly active users in the bloc.

The investigation will also look at dangers from the platform's "potentially addictive design" that could have "negative consequences" on users' "physical and mental well-being," said the European Commission, the EU's powerful digital watchdog.

The probe is being launched under a mammoth law known as the Digital Services Act (DSA) that forces the world's largest tech firms to do more to protect European consumers online.

"We want to ensure that Temu is complying with the Digital Services Act. Particularly in ensuring that products sold on their platform meet EU standards and do not harm consumers," EU tech chief Margrethe Vestager said in a statement.

The EU wants to know more about the systems Temu has in place to "limit the sale" of illegal products as well as how the platform restricts their "reappearance."

Temu will also have to explain what measures it is taking to address any risks from its service, including game-like reward programs. Temu said it would cooperate with the EU.

"Temu takes its obligations under the DSA seriously, continuously investing to strengthen our compliance system and safeguard consumer interests on our platform," a Temu spokesperson said. "We will cooperate fully with regulators to support our shared goal of a safe, trusted marketplace for consumers," the spokesperson said in a statement.

Multiple probes

The EU probe will also look at Temu's systems and how they recommend content and products to users as well as whether the platform is complying with the obligation to give researchers access to Temu's publicly available data, the commission said.

Temu will also have to provide more details about the "parameters" of its recommender systems, which are used by platforms to push more personalized content. The EU stressed that the "opening of formal proceedings does not prejudge its outcome" and there is no deadline for the probe's completion.

Temu is among 25 "very large" online platforms that must comply with the DSA or risk fines that could reach as high as six percent of their global turnover, or even a ban for serious and repeated violations.

Other shopping platforms that must comply with the DSA include Chinese online retailer AliExpress, US giant Amazon and Chinese-founded Shein.

Other DSA investigations have targeted AliExpress, social media platform X, which is owned by tech billionaire Elon Musk and used to be called Twitter, as well as Facebook and Instagram owned by Meta.

Investigations in the US

Simultaneously, Temu is already under investigation by the U.S. government over data theft and alleged business malpractices since October 2.

House Republicans have requested briefings from the FBI and other intelligence agencies on how Temu handles American citizens' data.

They have cited national security concerns, given Temu’s association with its parent company, Pinduoduo, which faced controversy last year when it was suspended from the Google Play Store after allegations that it could install malicious software to collect users' personal data without their consent.

The U.S. Select Committee on Intelligence sent a letter to the Securities and Exchange Commission and the FBI, highlighting concerns about Temu’s data practices and its opaque corporate structure.

Although Temu was registered as a U.S. company in Boston, Massachusetts, lawmakers argue that its actual headquarters are located in Shanghai, China.