For years now, Temu’s rise has looked unstoppable. The platform entered the EU in April 2023 and, within two years, grew to nearly 130 million monthly users. The challenge for regulators is that its compliance systems appear to have expanded far more slowly than its customer base. And because of that, Temu is being slapped with a hefty fine.
The European Commission wants €200 million (roughly US $232 million) after a 19-month investigation found consumers were highly likely to encounter illegal or unsafe products on the platform.
The penalty is the largest ever issued under the EU’s Digital Services Act (DSA), a landmark piece of legislation designed to hold major online platforms accountable for risks their services create.
According to the commission the scale of the problem runs deep. Dangerous electronics and unsafe baby products are flashpoints in a list that extends to clothing and jewellery too. Regulators argue that Temu’s own risk assessment underestimated the scale of these issues. They’ve added that it failed to provide a comprehensive picture of the potential harm facing consumers.
It goes deeper. European regulators also criticised Temu’s recommendation systems and influencer-driven promotions, arguing they could amplify the visibility of problematic products. This might sound like an unusual reason to prosecute. It probably wouldn’t be possible without the DSA. Under these rules, regulators can target not only in what platforms host, but how they promote those products.
Temu has said it disagrees with the ruling, fine, and is considering its options. Whatever happens on that front, this case highlights a glaring issue for Chinese brands expanding overseas.
The competitive pricing and rapid growth that worked so well at home, won’t bear the same fruit if companies don’t play by regulators’ rules. With brands like Meituan, Cotti and Mixue, as well as a number of EV companies all taking big steps into the global market of late, it’s unlikely this is the last bit of regulatory news we’ll have for you.
