The Temu site in the sights of the European authorities. The European Commission opened an investigation on Thursday against the online shopping site of Chinese origin, suspected of not acting sufficiently against the sale of illegal and potentially dangerous products. “We want to ensure that the products sold (on the platform) comply with EU rules and do not endanger consumers,” explained Competition Commissioner Margrethe Vestager.
There is no legal deadline for the conclusion of the investigation. If Temu is found guilty of criminal offences, she could be fined up to 6% of her annual turnover, under the new EU Digital Services Regulation (DSA).
A low-cost strategy
Temu, which is experiencing meteoric growth in Europe thanks to a low pricing strategy, is the international version of the Chinese e-commerce giant Pinduoduo, born in 2015. It offers a myriad of products: clothing, toys, decorations, tools, high -tech… The group is committed to working closely with the services of the European Commission.
“Temu takes its obligations under the Digital Services Regulation very seriously and continually invests to protect consumers’ interests. We will cooperate fully with regulators,” a spokesperson said. Brussels’ investigation comes after several warnings and written questions directed at the platform.
It will focus in particular on “the systems put in place to limit the sale of non-compliant products in the European Union” and in particular on the means adopted “to prevent the reappearance of unwanted traders, previously suspended” for this reason, explained the European Commission .
A complaint filed last May
The Brussels executive, which now plays the role of digital policeman in the European Union, will also examine “the risks related to the service-dependency design” of online sales. This includes gamified reward programs “which could have negative consequences on the physical and mental well-being of users”.
European consumer groups filed a complaint against Temu in May, accusing it in particular of using deceptive interfaces to encourage users to spend more on the platform. The company said on October 11 that it had already “taken significant measures” since the spring, stressing that it would continue to “refine” its practices “within the framework of digital services regulation.”
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Interview between the Time.news Editor and E-commerce Regulation Expert Dr. Sophie Lemaire
Time.news Editor: Welcome to Time.news, Dr. Lemaire. Thank you for joining us to discuss the recent investigation into Temu by the European Commission. Let’s start with the basics—what are the key concerns the European authorities have regarding Temu?
Dr. Sophie Lemaire: Thank you for having me. The key concerns revolve around the potential sale of illegal and hazardous products on the Temu platform. The European Commission, led by Competition Commissioner Margrethe Vestager, aims to ensure that all products sold comply with EU regulations designed to protect consumers. This is particularly important in an online environment where it’s challenging to regulate every item sold.
Time.news Editor: Interesting. With Temu’s rapid growth and low-cost strategy, how significant is this investigation in terms of their operations in Europe?
Dr. Sophie Lemaire: It’s quite significant. Temu, as an offshoot of the Chinese giant Pinduoduo, has been capturing market share with their competitive pricing. However, if they are found guilty of not addressing the sale of harmful products, they could face fines of up to 6% of their annual turnover, thanks to the EU’s new Digital Services Regulation. This could impact their pricing strategy and reputation significantly.
Time.news Editor: You mentioned the Digital Services Regulation. How does this regulation tie into the responsibilities of companies like Temu?
Dr. Sophie Lemaire: The Digital Services Regulation is a robust framework that places a strong emphasis on consumer safety and accountability for online platforms. It compels companies to actively monitor and remove illegal content and products. For platforms like Temu, this means they need to bolster their compliance measures—potentially investing in better technology and review processes to avoid legal repercussions.
Time.news Editor: Temu has stated that it takes its obligations seriously and aims to cooperate with the regulators. In your opinion, is it enough for them to simply express cooperation?
Dr. Sophie Lemaire: While public statements of cooperation are a good start, actual implementation is crucial. They will need to demonstrate their commitment by enhancing product review mechanisms, investing in consumer protection, and ensuring transparency. Regulatory bodies will be closely observing their actions going forward, not just their words.
Time.news Editor: Given the landscape of e-commerce, what might be the broader implications of this investigation, both for Temu specifically and for the industry at large?
Dr. Sophie Lemaire: This investigation could set a precedent for how European authorities handle online marketplaces, especially those from outside the EU that don’t have a long-standing presence in the region. If the investigation leads to stricter enforcement, we may see a shift in how platforms operate and enforce product compliance. This could also lead other companies to reassess their policies and practices to avoid similar scrutiny.
Time.news Editor: As we move forward in this digital age, do you think we’ll see more investigations like this one, particularly as new platforms emerge?
Dr. Sophie Lemaire: Absolutely. As e-commerce continues to expand rapidly, we can expect regulators to be vigilant in monitoring compliance with consumer protection laws. The challenges posed by global platforms make it essential for authorities to bolster their oversight mechanisms to protect consumers effectively.
Time.news Editor: Thank you, Dr. Lemaire, for this insightful discussion on Temu and the implications of its investigation by the EU. It’s clear that the future of digital marketplace regulation is evolving, and we’ll be sure to follow this story closely.
Dr. Sophie Lemaire: Thank you for having me! It’s a pleasure to discuss such an important topic, and I look forward to seeing how this investigation unfolds.