The European Union has fined Chinese online retailer Temu €200 million ($232 million) for failing to do enough to prevent the sale of illegal products on its platform, marking a major enforcement action under the bloc’s Digital Services Act (DSA).
EU tech regulators announced the penalty on Thursday following the first phase of a wide-ranging investigation that has lasted nearly two years. Officials indicated that additional penalties could follow as they continue examining the company’s practices.
The investigation began after complaints from the pan-European consumer organisation BEUC and 17 of its national member groups. Regulators assessed whether Temu had complied with DSA requirements obliging large online platforms to identify and mitigate risks linked to illegal and harmful content.
The European Commission said Temu failed to properly identify, analyse and assess the systemic risks posed by illegal products sold through its marketplace and the resulting harm to consumers across the European Union.
According to the Commission, the company also failed to adequately evaluate how its recommendation systems and product promotion programmes involving affiliated influencers could increase the risk of illegal products being sold.
Temu rejected the Commission’s findings and described the penalty as excessive.
“Temu respects the objectives of the Digital Services Act and the need for clear, consistent rules across the digital economy. However, we disagree with the European Commission’s decision and consider the fine to be disproportionate,” the company said in a statement.
Temu added that the ruling was based on an earlier assessment and did not reflect changes it has since made.
“The decision relates to our first DSA assessment in 2024 and does not reflect the current state of our systems. Temu engaged constructively with the Commission throughout the process and has since taken further steps to strengthen risk assessment, platform governance, and user protection,” the company said.
The retailer also stated that it would continue working with regulators while considering its options regarding the decision.
The Commission has ordered Temu to submit an action plan by August 28 outlining how it will address the identified shortcomings. Regulators will review the plan before deciding, within two months, whether the company has taken sufficient steps to comply with the DSA.
“This is about risk management. It is very much a cornerstone of our DSA,” EU technology chief Henna Virkkunen told reporters. “With this decision we are sending a very strong message to Temu.”
Virkkunen said regulators would continue investigating whether elements of Temu’s platform design are addictive. Authorities are also examining broader concerns about the sale of illegal products, the operation of recommendation systems, and researchers’ access to platform data.
Under the DSA, companies can face fines of up to 6% of their annual global turnover for violations.
The penalty imposed on Temu is the second major fine issued under the legislation. In December, the EU fined social media platform X €120 million for breaches of the same rules.