The European Commission (EC) has officially recognised fast-fashion e-commerce retailer Temu, which is owned by PDD Holdings, as a Very Large Online Platform (VLOP) under the Digital Services Act (DSA).
The classification applies to online retailers with more than 45 million users in the European Union.
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Temu, which debuted in Europe in April 2023, had recorded 75 million average monthly active users in the region for the six months ended 31 March 2024, as report by Reuters.
With VLOP status, Temu is now under the direct supervision of the EC, in collaboration with the Irish digital services coordinator.
The retailer is required to adhere to the DSA’s most stringent regulations within four months of its notification, including the obligation to assess and mitigate systemic risks associated with its services.
These risks encompass issues such as the distribution of illegal content, counterfeit goods and products that violate intellectual property rights.
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By GlobalDataThe retailer must implement measures to address these risks, potentially involving changes to its terms of service, user interface design, moderation processes and algorithms to prevent the sale of prohibited items.
Temu is obliged to strengthen its internal processes related to the detection of systemic risks, including enhancing resources, testing, documentation and supervision.
Temu, which is owned by PDD Holdings, is now required to provide the Commission with risk assessment reports four months after the formal designation and annually thereafter.
Non-compliance would result in penalties of up to 6% of the company’s global annual turnover.
The EC stated: “The Commission services will carefully monitor the application of the DSA rules and obligations by the platform, especially concerning measures to guarantee consumer protection and address the dissemination of illegal products. The Commission services are ready to engage closely with Temu to ensure these are properly addressed.”
Temu joins major tech companies such as Amazon, Meta and TikTok, all already classified under the Act.
In April 2024, the EC officially designated fast-fashion online retailer Shein as a VLOP under the DSA.
