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China’s e-commerce market Temu is subject to stricter EU regulations as a ‘very large online platform’

Temu, a low-cost e-commerce marketplace owned by Chinese online retailer Pinduoduo, is set to face the toughest European Union regulations after authorities deemed the company a “very large online platform” (VLOP) under the Digital Services Act (DSA).

The news comes about two weeks after European consumer protection groups filed coordinated complaints against Temu over a number of alleged DSA-related violations, and a year after Temu opened its first office in the region. According to some reports, Temu subsequently surpassed 75 million users in the EU, a number that far exceeds the EU threshold of 45 million for being classified as a VLOP.

Extra control

The general obligations set out in the DSA have been in force since February, but an additional set of stricter regulations came into force last August, initially affecting 19 separate platforms designated as VLOP, or very large internet search engine (VLOSE). This concerned products belonging to, among others: to Alibaba, Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft and Snap. An additional three porn sites received VLOP status in December, and Temu’s Chinese retail rival Shein achieved VLOP status in April.

Temu is now the 24th company to face additional obligations under the DSA, meaning it will be subject to additional scrutiny over its use of algorithms, artificial intelligence, content rankings, recommendation tools etc., while also having to assess and mitigate any “systemic risk” arising from Temu’s services, including those relating to 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, demanding that lawmakers designate the platform as a VLOP. At the same time, several BEUC member organizations filed complaints with national consumer protection authorities accusing Temu of violating the DSA.

And it looks like the European Commission listened.

Although the additional VLOP rules have been in force since August last year, Temu will have until the end of September to adapt them due to a four-month grace period from the moment of notification – starting today.

From then on, Temu will need to work with the Commission and the Irish Digital Services Coordinator – Temu’s European headquarters is in Dublin – to provide regular risk assessment reports, initially and then annually thereafter.

“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 to TechCrunch. “We are fully committed to complying with the rules and regulations set out by DSA to ensure the safety, transparency and protection of our users in the European Union.”