Temu, the popular low-cost e-commerce marketplace owned by Pinduoduo, is facing increased scrutiny and regulation in the European Union (EU) after being designated a “very large online platform” (VLOP) under the Digital Services Act (DSA). This designation comes after European consumer protection groups filed complaints against Temu for alleged breaches of the DSA. Despite opening its first office in the region just a year ago, Temu has already amassed over 75 million users in the EU, surpassing the EU’s threshold of 45 million for VLOP classification.
The DSA, which has been in effect since February, imposes additional obligations on VLOPs and very large online search engines (VLOSE). Previously, 19 platforms, including Alibaba, Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft, and Snap, were subject to enhanced scrutiny. In December, three porn sites were granted VLOP status ahead of the official application date. Temu’s Chinese competitor Shein was the first company designated a VLOP under the new rules.
As the 24th company to face these additional obligations, Temu will now be subject to increased scrutiny regarding its use of algorithms, AI, content rankings, recommendation tools, and more. The company will also be required to address any “systemic risks” stemming from its services, such as counterfeit, illegal, or unsafe products listed on its platform.
In May, the European consumer organization BEUC filed a formal complaint against Temu, urging lawmakers to designate it as a VLOP. Several BEUC member organizations also filed complaints with their national consumer protection authorities, accusing Temu of DSA violations. The European Commission has now responded to these concerns by designating Temu as a VLOP.
While the binding rules for VLOPs go into effect in August for previously designated companies, Temu will have until the end of September to comply due to a four-month grace period starting from the notification date.
Moving forward, Temu will be required to work closely with the European Commission and the Irish Digital Services Coordinator, as its European headquarters are based in Dublin. The company will need to provide regular risk assessment reports, initially at the start and then on an annual basis.