What: European Commission finds Temu in breach of Digital Services Act due to insufficient product safety measures and misleading risk assessments.

Why it is important: The findings highlight critical gaps in fast-fashion platforms' compliance systems, demonstrating the growing tension between rapid market expansion and regulatory requirements in the European retail sector.

The European Commission has identified significant breaches of EU digital rules by Chinese e-commerce platform Temu, particularly regarding the sale of illegal products. Preliminary findings revealed a "high risk" of EU consumers encountering illegal items on the platform, supported by evidence from mystery shopping exercises that uncovered non-compliant products, including baby toys and small electronics. The investigation found Temu's risk assessment to be "inaccurate," relying on general industry information rather than specific marketplace data, potentially leading to inadequate mitigation measures. The probe, conducted under the Digital Services Act, examined Temu's efforts to curb illegal sales and address risks relating to consumer protection and public health. The platform now faces potential fines of up to 6 per cent of its global annual revenue if found in breach of the legislation. The investigation also extends to concerns about addictive design features and data access practices, with Temu stating its commitment to continued cooperation with the commission.

IADS Notes: The EU's action against Temu in July 2025 represents a culmination of escalating regulatory pressure on Chinese e-commerce platforms. Following February 2025's comprehensive reforms that established platform liability for unsafe products, the EU has systematically tightened oversight of cross-border e-commerce. This was evidenced by June 2025's BEUC complaint regarding manipulative digital practices and May 2025's introduction of a €2 fee on small packages. The focus on Temu's risk assessment inadequacies parallels similar concerns raised with AliExpress in June 2025, highlighting a broader pattern of scrutiny over product safety and consumer protection. These actions come amid significant market pressures, with European retailers grappling with the impact of 4.6 billion low-value packages entering the EU market in 2024, of which 91% originated from China.

Brussels accuses China’s Temu of breaking EU digital rules