The European Union has imposed a fine of €200 million ($232 million) on Chinese online retailer Temu for violations of the Digital Services Act (DSA). According to a Reuters report, the bloc determined that the platform did not take sufficient action to prevent the sale of illegal products to users across Europe. This decision follows an investigation launched nearly two years ago after complaints from the pan-European consumer organization BEUC and 17 of its national members.
Regulatory Findings
EU regulators stated that Temu's risk assessment systems were inadequate, increasing the likelihood that users across the bloc could encounter illegal products on the platform. The European Commission said Temu 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." Regulators warned that the platform's estimated 130 million users in Europe were "very likely" to encounter dangerous or illegal products while using the service. According to the Commission, Temu did not properly evaluate how its recommender systems and influencer-driven product promotions could contribute to the spread of illegal goods.
Temu's Response
Temu expressed disagreement with the ruling and described the penalty as excessive. In a statement to Reuters, the company said, "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." The company added that the decision relates to its first DSA assessment in 2024 and does not reflect the current state of its systems. Temu noted that it engaged constructively with the Commission throughout the process and has since taken further steps to strengthen risk assessment, platform governance, and user protection.
Next Steps
The European Commission has asked Temu to submit an action plan by August 28. Regulators will then assess whether the company has made sufficient changes to comply with DSA requirements, with a final decision expected within two months after the submission. EU tech chief Henna Virkkunen told reporters, "This is about risk management. It is very much a cornerstone of our DSA. With this decision, we are sending a very strong message to Temu." The Commission said investigations will continue into whether Temu's platform design encourages addictive behavior, alongside broader concerns about illegal product listings and researchers' access to platform data.
Penalties Under the DSA
Under the DSA, companies can face penalties of up to 6% of their global annual turnover for violations. Temu's fine marks the second major DSA penalty issued by the EU after Elon Musk-owned X was fined €120 million last year.
