In a significant development for Temu, the low-cost e-commerce marketplace owned by Chinese online retailer Pinduoduo, the European Union (EU) has designated the company a "very large online platform" (VLOP) under the Digital Services Act (DSA). This move comes after European consumer protection groups recently filed coordinated complaints against Temu for alleged breaches under the DSA.

Having opened its first office in the region a year ago, Temu quickly surpassed 75 million users in the EU, well above the EU's threshold of 45 million to be classified as a VLOP. As a result, the company is now subject to the EU's strictest rules and regulations governing online platforms.

Since February, Temu has been bound by general obligations set out under the DSA. However, last August more stringent rules were introduced, affecting 19 platforms, including Alibaba, Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft, and Snap, that were classified as VLOPs or very large online search engines (VLOSE).

As of now, Temu becomes the 24th company to face extra obligations under the DSA. The company will undergo increased scrutiny regarding its use of algorithms, AI, content rankings, recommendation tools, and other aspects. It will also have to assess and mitigate any "systemic risks" stemming from its services, including addressing counterfeit, illegal, or unsafe products on its platform.

In mid-May, the European consumer organization BEUC, representing 45 consumer protection groups across the EU, filed a formal complaint against Temu and requested that lawmakers designate it as a VLOP. Additionally, several BEUC member organizations lodged complaints with their national consumer protection authorities, alleging DSA breaches by Temu.

While the additional rules for VLOPs have been in effect since August last year, Temu has been granted a four-month grace period to comply. This grace period ends at the end of September, starting today.

Henceforth, Temu will need to collaborate with the Commission and Irish Digital Services Coordinator, as the platform's European headquarters are based in Dublin. It will be required to provide regular risk assessment reports, initially at the start, and then yearly thereafter.

In response to these developments, a spokesperson for Temu acknowledged the EU's designation of the platform as a VLOP and expressed the company's full commitment to adhering to the DSA's rules and regulations. The spokesperson stated that Temu is dedicated to ensuring the safety, transparency, and protection of its users within the European Union.

Temu now joins a growing list of online platforms subject to heightened scrutiny and responsibility. This move by the EU underscores its focus on enhancing consumer protection and addressing potential risks within the digital marketplace.