Temu to face stricter EU online rules after user numbers exceed key threshold

Temu, the fast-fashion e-commerce retailer owned by PDD Group, will have to comply with stricter European Union online content rules after its user numbers exceeded a key criterion.

The European Commission stated on Friday that this move puts Temu in the same category as technology giants like Amazon, Meta Platforms, and TikTok.

Under the EU's Digital Services Act (DSA), companies with more than 45 million monthly active users are designated as Very Large Online Platforms (VLOPs). These VLOPs face tougher obligations to tackle illegal and harmful content as well as counterfeit products on their platforms.

Temu, which entered the EU market in April last year, had around 75 million average monthly active users in the bloc over the six months ending 31 March, 2024. "Following today's designation as a VLOP, Temu will have to comply with the most stringent DSA rules within four months of notification, by the end of September 2024," the Commission stated.

Key obligations include thoroughly assessing and mitigating systemic risks from Temu's services such as listings of counterfeit goods, unsafe or illegal items, and products infringing intellectual property rights. Temu must enhance measures like updating terms of service, improving reporting systems, strengthening moderation processes, and refining algorithms to prevent prohibited goods sales.

The DSA also requires Temu to evaluate potential adverse effects on consumer health and safety, especially for underage users. Robust age verification to restrict inappropriate purchases is mandated. Furthermore, Temu faces increased transparency through independent audits, ad repositories publication, giving data access to researchers, and issuing regular transparency reports on moderation.

"We are fully committed to adhering to the DSA rules to ensure user safety and protection within the EU," Temu stated.

Violations can attract penalties up to 6 per cent of global annual turnover.

The Commission highlighted it will closely monitor Temu's compliance, especially regarding consumer protection and curbing illegal product dissemination. All online platforms already had to follow general DSA requirements from February 2024 on trader traceability, illegal product notifications and grievance mechanisms.

This is the 24th VLOP designation under the landmark DSA legislation by the EU, illustrating its continued market surveillance efforts.

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