The EU-Temu standoff intensifies because the European Fee launches a proper probe into the e-commerce platform’s advertising and marketing practices and person engagement ways.
The probe, launched on October 31, targets every little thing from the platform’s addictive reward techniques to its product suggestion algorithms.
For Temu, whose EU person base exploded to 92 million month-to-month energetic customers by September 2024, the investigation spotlights the rising stress between speedy digital scaling and regulatory compliance. Since its European launch in April 2023, the platform’s advertising and marketing playbook has helped it surge previous the 45 million person threshold, incomes it Very Massive On-line Platform (VLOP) standing this Could.
Brussels’ investigation particularly questions Temu’s digital engagement methods, together with its gamified buying expertise and AI-powered suggestion engines – core parts of the platform’s viral progress within the European market.
The investigation additionally marks a essential take a look at of the EU’s Digital Providers Act (DSA), a complete regulatory framework designed to make sure digital platforms function safely and transparently within the European market.
Key areas of investigation
The Fee’s investigation will deal with 4 major considerations:
1. Product compliance and vendor verification
The investigation focuses on Temu’s system for stopping the sale of non-compliant merchandise within the EU. Regulators are involved in regards to the platform’s potential to forestall suspended rogue merchants from returning to {the marketplace} and cease the reappearance of beforehand recognized non-compliant items.
2. Addictive design options
The Fee scrutinises Temu’s game-like reward applications and different probably addictive design parts. There are considerations that these options might negatively impression customers’ bodily and psychological well-being, elevating questions in regards to the platform’s duty to guard shopper pursuits.
3. Advice techniques
The investigation will study how Temu recommends content material and merchandise to its customers. Underneath the DSA, platforms should be clear about their suggestion algorithms and supply customers with at the least one simply accessible possibility that isn’t based mostly on private profiling.
4. Analysis information entry
The Fee can be investigating whether or not Temu has met its obligations to offer researchers entry to publicly accessible platform information, an important requirement for transparency beneath the DSA.
Regulatory framework and potential penalties
If the Fee’s suspicions are confirmed, Temu might face important penalties for violating Articles 27, 34, 35, 38, and 40 of the DSA. Government VP for Europe Match for the Digital Age, Margrethe Vestager, emphasised the significance of compliance, stating: “We need to be certain that Temu is complying with the Digital Providers Act. Notably in guaranteeing that merchandise bought on their platform meet EU requirements and don’t hurt shoppers. Our enforcement will assure a stage enjoying area and that each platform, together with Temu, totally respects the legal guidelines that hold our European market protected and honest for all.”
The highway forward
The Fee’s investigation follows preliminary analyses of Temu’s danger evaluation report from September 2024 and responses to formal info requests made in June and October 2024. Whereas the investigation has no set deadline, the Fee has indicated it is going to be handled as a precedence.
The probe doesn’t routinely point out guilt, and Temu can have the chance to handle the considerations by commitments to treatment the problems. The investigation will contain gathering extra proof by info requests, monitoring actions, and interviews.
General, this investigation represents a big take a look at of the DSA’s enforcement capabilities and will set necessary precedents for different on-line marketplaces working within the EU. It’s price noting that the Fee’s motion doesn’t preclude separate enforcement measures by nationwide shopper safety authorities or market surveillance our bodies, notably beneath the upcoming Common Product Security Regulation, which takes impact on December 13, 2024.
The case in opposition to Temu demonstrates the EU’s dedication to implementing its digital rules and guaranteeing that speedy enterprise progress doesn’t come on the expense of shopper security and platform duty. Because the investigation unfolds, it should doubtless function a benchmark for the way the DSA can be utilized to control massive on-line platforms and defend European shoppers within the digital market.
(Photograph by Christian Lue )
See additionally: EU cracks down on Temu and Shein: Compliance with DSA beneath scrutiny
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