PDD in the spotlight after Temu’s official addition to the EU’s Digital Services Act (PDD)

Chinese technology company PDD Holdings (NASDAQ:PDD) was in the spotlight on Friday as popular e-commerce platform Temu was officially added to the EU’s Digital Services Act as a “very large online platform” (VLOP).

“Due to today’s designation as VLOP, Temu will have to comply with the most stringent rules set out in the DSA within four months of notification (i.e. by the end of September 2024), such as the obligation to properly assess and mitigate any systemic risks arising from the services they provide, including the issuance and the sale of counterfeit goods, dangerous or illegal products and items infringing intellectual property rights,” the European Commission said in its statement statement.

PDD shares were down by about 0.7% in trading before the market opens.

The European Commission defines a VLOP as one that has more than 45 million users in the European Union. Temu reportedly has over 75 million monthly active users on the continent.

The official designation comes almost two weeks after European consumer organization BEUC filed a complaint with the European Commission accusing Temu of allegedly violating the DSA. BEUC accused the shopping app of failing to protect consumers and using manipulative practices that are illegal under EU law.

Temu now joins a growing list of companies that have faced additional scrutiny from the European Commission under the DSA, including Alibaba, Alphabet, Amazon, Apple and others. In total, 24 platforms and search engines were classified under DSA.