PDD Shares Fall Amid Tighter EU Rules on Online Content Author: Investing.com

The European Commission announced on Friday that Chinese e-commerce company Temu faces tougher EU rules on online content after breaching the key user threshold.

Shares of PDD Holdings, Temu’s owner, fell 1.3% in pre-market trading.

The committee’s decision means Temu will now join the likes of Amazon (NASDAQ:), Meta Platforms (NASDAQ:) and TikTok.

Under the EU’s Digital Services Act (DSA), platforms with more than 45 million users are classified as very large online platforms (VLOPs) and must take additional measures to combat illegal and harmful content, including counterfeit products.

Temu, which entered the EU market in April last year, had an average of 75 million monthly active users in the EU in the six months ending March 31.

“Following today’s VLOP designation, Temu will be required 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),” the EU’s executive body, which serves as the EU’s technology regulator, said .

DSA’s responsibilities for VLOP include assessing and mitigating systemic risks associated with their services, such as the sale of counterfeit goods, unsafe or illegal products, and intellectual property infringements.

Violations of DSA rules may result in financial penalties of up to 6% of a company’s total annual turnover.