Temu fined 200 million euros for breaching EU rules on sale of illegal products

[BRUSSELS] Chinese online retailer Temu has been fined 200 million euros (S$297 million) for not doing enough to stop the sale of illegal products, European Union tech regulators said on Thursday (May 28), following the first part of a wide investigation.

Further penalties could follow in the coming months as a result of a nearly two-year investigation under the Digital Services Act that requires large online companies to do more to tackle illegal and harmful content on their platforms.

EU regulators investigated Temu following complaints by pan-European consumers’ organisation BEUC and 17 of its national members.

The European Commission, the EU executive, said the company failed to diligently identify, analyse, and assess the systemic risks of illegal products sold on its platform and the resulting harm to consumers in the European Union.

It criticised Temu for not properly assessing how its recommender systems and product promotion programmes by affiliated influencers could amplify the risks of sales of illegal products.

Temu said it took note of the Commission’s decision.

“We will continue to engage with regulators in good faith, while reviewing the decision carefully and considering all available options,” a Temu spokesperson said.

Commission will assess Temu action plan

The Commission gave Temu until Aug 28 to deliver an action plan that regulators will assess, with a decision on whether the company has done enough to comply with the DSA due in two months’ time.

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“This is about risk management. It is very much a cornerstone of our DSA,” EU tech chief Henna Virkkunen told reporters. “With this decision we are sending a very strong message to Temu.”

She said regulators will continue their investigation into whether the design of Temu’s service is addictive and the broader assessment of whether it is selling illegal products as well as its recommenders’ and researchers’ access to data.

Companies face fines of as much as 6 per cent of their global annual turnover for DSA breaches. The Temu penalty is the second under the DSA, after Elon Musk’s social media network X was fined 120 million euros last December. REUTERS