EU Tech Regulators Fine Chinese Online Retailer €200 Million for Illegal Product Sales

European Union technology regulators have fined a Chinese online retailer €200 million ($232 million) because the platform failed to adequately stop the sale of illegal products.

This decision was made during the first phase of a large-scale investigation conducted under the EU's "Digital Services Act" (DSA). According to the European Commission's statement, the company failed to conduct an appropriate assessment of systemic risks regarding how illegal products were reaching consumers in the EU, including through its recommendation algorithms and influencers.

By the European Commission's assessment, Temu failed to evaluate how its recommendation system and product promotion could increase the distribution of illegal goods.

The company did not agree with the fine and stated that the decision does not reflect its current systems and that it has already strengthened consumer protection and risk management.

Under the Digital Services Act, large platforms may face fines of up to 6% of global annual turnover in case of violations.

Regulators gave Temu until August 28 to submit an action plan, which the European Commission will then evaluate and decide whether compliance is sufficient. The EU's technology commissioner noted that this decision is a strong signal to platforms that risk management and consumer protection are central requirements of the DSA.

This is the second major fine under the DSA framework, following a similar violation for which a company was fined €120 million.