Chinese e-commerce marketplace Temu faces stricter EU rules as a 'very large online platform'

Temu, the low-cost e-commerce marketplace owned by Chinese online retailer Pinduoduo, is to face the European Union's strictest rules after authorities designated the company a "very large online platform" (VLOP) under the Digital Services Act (DSA).

The news comes some two weeks after European consumer protection groups filed coordinated complaints against Temu over an alleged raft of alleged breaches relating to DSA, and a year after Temu opened its first office in the region. Temu subsequently went on to pass 75 million users in the EU, according to some reports, a figure that sits well above the EU's 45 million threshold for being classed as a VLOP.

Additional scrutiny

The general obligations set out under the DSA have applied since February, but an additional set of more stringent rules came into force last August, initially impacting 19 separate platforms designated as a VLOP or very large online search engine (VLOSE). This covered products belonging to Alibaba, Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft and Snap, among others. In December, an additional three porn sites were given VLOP status, while Temu's Chinese retail rival Shein was made a VLOP in April.

Temu is now the 24th company to face extra obligations under the DSA, meaning the company will face extra scrutiny over its use of algorithms, AI, content rankings, recommendation tools and suchlike, while having to assess and mitigate any "systemic risks" that stem from Temu's services, including addressing counterfeit, illegal or unsafe products listed on its platform.

In mid-May, BEUC -- the European consumer organization representing 45 consumer protection groups across the bloc -- filed a formal complaint against Temu while requesting that lawmakers designate the platform as a VLOP. In tandem, more than a dozen BEUC member organizations filed complaints with their national consumer protection authorities, accusing Temu of breaching DSA.

And it seems the European Commission has listened.

While the additional rules that apply to VLOPs have been binding since last August, Temu will have until the end of September to comply due to a four-month grace period given from the point of notification -- starting today.

From that point, Temu will need to work with the Commission and Irish Digital Services Coordinator — Temu's European HQ is in Dublin — to provide regular risk assessment reports, once at the start, and then on a yearly basis moving forward.

"Temu acknowledges the European Commission's designation of our platform as a Very Large Online Platform (VLOP) under the Digital Services Act (DSA)," a Temu spokesperson said in a statement issued to TechCrunch. "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."