The European Commission released a press release on Oct. 31 and said it will evaluate the possibility of violation of the law regarding the sale of illegal products by Temu, its potential addiction, and the method of recommendation algorithms. The Commission sent an information request to Temu on the 11th to explain what measures it took to prevent the sale of illegal products. However, it explained on the same day that it decided that an official investigation was necessary after preliminary analysis of the contents of the request and information submitted by third parties. It judged that Temu’s actions were insufficient.
Temu is expected to come up with corrective measures to avoid fines during the investigation process and submit them to the Commission. If the final conclusion is made due to a violation of the law, up to 6% of global annual sales can be imposed as fines. Temu is targeting the global market with a variety of discount events and low-cost products, and it also drew attention by releasing a television advertisement that said, “Shop like a billionaire” at the Super Bowl of the NFL final last year.
However, amid the recent intensifying competition in the low-cost online shopping market, Temu parent Pinduoduo’s second-quarter sales amounted to 97.1 billion yuan, falling short of the market forecast average of 100 billion yuan.
DSA is a law introduced to prevent the spread of online false information and harmful, illegal products or content. It prohibits the use of sensitive personal information data of users or targeted advertisements targeting minors. Since February, it has been implemented on all online platforms except for cases with less than 50 employees and less than 10 million euros in annual sales.
In this law, if it is designated as a “VLOP,” it is subject to stronger regulations, such as a separate obligation. Temu was also designated as a VLOP in May. The EU is also investigating DSA violations against Meta Platforms, the parent company of Facebook and Instagram, AliExpress, Alibaba’s online shopping mall, TikTok, and X, which was acquired by Tesla CEO Elon Musk.
JULIE KIM
US ASIA JOURNAL
