The European Union on Thursday fined Chinese-owned online retailer Teemu €200 million ($232 million) for not complying with the bloc’s Digital Services Act (DSA), a rule that forces the world’s most popular digital platforms to conduct risk assessments of potential threats to consumers.
It is the second such fine imposed under the EU’s DSA on content, after Elon Musk’s X platform was fined €120 million in December.
EU regulators said consumers on Temu were “very likely to encounter illegal goods” and that the retailer “seriously underestimated how often EU consumers are likely to encounter such products”.
“The company failed to identify, analyze and assess the systemic risks of illicit products being offered on its platform and the resulting harm to consumers in the EU,” the EU said. He said Teemu failed to properly assess the design of the platform and how it could “increase the proliferation risks of illicit products.”
Teemu reacted to the announcement, saying the fine was “disproportionate”. Teemu said it was “carefully reviewing the decision and assessing all options available to us,” stressing that it had worked “constructively” with regulators.
The Chinese retailer will now have to pay the fine and submit a plan to the EU by August 28 to address EU concerns. Non-compliance will result in periodic penalties being paid, but Temu also has the option to appeal the fines in EU courts, as Elon Musk chose to do.
Unsafe children’s toys found in ‘mystery shopping’
The EU fined Temu after its regulators conducted a “mystery shopping exercise” where they found several “non-compliant” products, including several electronic device chargers that failed basic safety tests.
Investigators also found that a high percentage of children’s toys pose a safety risk. The compromised toys either contained chemicals at levels exceeding safety limits or had parts that came apart and could pose a choking hazard.
TEMU enjoys high popularity in the EU, with 130 million users after the block entered the market in 2023. Consumers are attracted to it because it offers cheap goods shipped directly from sellers in China.
But the EU began keeping a closer eye on Temu from October 2024 after an investigation in July last year found Temu had breached historic rules about the risks of illicit products.
“Temu is a very big player in the European market,” EU Technical Commissioner Hanna Virkkunen told reporters.
Virkkunen said there was a danger that Teemu’s illegal products were easily available to many EU consumers.
EU investigation on China
The fine on Temu comes a day before the EU executive is due to debate how the 27-nation bloc should approach China.
Top EU officials have warned of the potential economic threat China poses to the bloc, arguing that Europe needs to be tougher to protect its economy.
Europe has pushed back at Chinese efforts to invest in the bloc, with local businesses saying they face unfair competition from their heavily subsidized rivals.
On Thursday, the European Union said it had launched a deeper investigation into Chinese e-commerce giant JD.com’s bid for major German electronics retail group Seconomy.
The EU said the investigation is seeking to determine whether state subsidies allowed the Chinese company to offer a higher price for Seconomy and, thus, distort the outcome of the takeover process.
Edited by: Zack Crellin