1. Introduction
On 28 July 2025, the European Commission issued a preliminary finding regarding a breach of the Digital Services Act (DSA) by the online platform Temu, and specifically of Article 34 DSA concerning the obligation to assess systemic risks.
In particular, the investigation focused on the sale of non-compliant products within the European Union, the potentially addictive design of the platform’s services, the platform’s recommendation systems, and the provision of access to data for the competent coordinators.
2. What is the DSA?
The DSA regulates the obligations of digital services, including online marketplaces that act as “intermediaries”, meaning providers of services known as “mere conduit”, “caching”, and “hosting”.
On 31 May 2024, Temu was designated as a Very Large Online Platform (VLOP), as it has more than 45 million monthly active users (in September 2024, it declared 92 million). As a result, it is subject to additional obligations, as set out in Section 5 of the DSA.
Among others, VLOPs are required to assess systemic risks, to adopt reasonable, proportionate and effective mitigation measures, to ensure transparency of online advertisements by publishing an ad repository, and to provide access to data to vetted researchers.
3. Launch of Formal Compliance Proceedings
As of 31 October 2024, the European Commission initiated formal proceedings against Temu to investigate potential breaches of the DSA, in particular of the provisions:
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on the lack of transparency of recommendation systems (Article 27, DSA),
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on incomplete and inaccurate risk assessments based on generic industry information rather than on Temu-specific data (Article 34, DSA),
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on mitigation of risks (Article 35, DSA),
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on provision of a recommendation system without profiling (Article 38, DSA),
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on provision of access to data for the competent Digital Services Coordinator (Article 40, DSA).
Of particular interest is the finding that the risk assessment was inadequate and relied on general industry information rather than specific measures applied by Temu itself.
4. Preliminary Finding
On 28 July 2025, the European Commission concluded (preliminary finding) that Temu breached its obligation under the DSA to diligently assess systemic risks, such as the dissemination of illegal products through its platform. Notably, the investigation relied, among others, on a mystery shopping exercise, through which it was found that consumers are highly likely to encounter non-compliant products (such as children’s toys and small electronics), while the existence of addictive design features was also examined.
5. Next Steps
Temu now has the opportunity to exercise its rights of defence by examining the Commission’s investigation file and submitting written observations on the preliminary findings.
Given the enhanced regulatory oversight of online platforms within the European Union, it is noted that in the event of a formal non-compliance decision under the DSA, the European Commission may issue a decision requiring specific corrective measures, impose a period of enhanced supervision, and impose a fine of up to 6% of the provider’s total worldwide annual turnover for the previous financial year.
6. Conclusion
The Temu case is pivotal for the implementation of the new DSA regulatory framework and confirms the shift of compliance responsibility to intermediary service providers. It is particularly important that regulatory authorities can act preventively and across borders, based on both national circumstances and EU-level obligations.
The outcome of the case will, in part, define the scope of application of risk management measures, algorithmic transparency, and trader traceability within the EU.
For the Law Office “Stergios Konstantinou & Associates
– SGKLegal”
| Stergios Konstantinou
Lawyer, Advanced LLM (IP & ICT Law) CIPP/E, CIPM, FIP Co – Char IAPP KnowledgeNet Chapter |
Eva Pitsi Trainee Lawyer, LLM |