Brussels imposes a €200 million fine on Temu under the DSA for hazardous baby toys and defective chargers.

      The European Commission has imposed a €200 million (approximately $232 million) fine on Temu, a Chinese e-commerce platform owned by PDD Holdings, for violating the Digital Services Act by failing to prevent the sale of unsafe products to consumers in Europe. This fine marks the EU's first significant enforcement action against a Chinese platform and is the second DSA penalty ever, following the €120 million fine levied against X in December.

      The Commission's investigation revealed that a significant number of chargers sold on the platform did not meet basic electrical-safety standards, and many baby toys presented medium to high safety risks, such as surpassing EU legal limits for chemicals and containing small detachable parts that could cause choking.

      The basis for the Commission's findings lies in Temu’s risk assessment report. This document is required under the DSA and should detail how large online platforms identify and manage systemic risks. However, the Commission found Temu’s assessment to be lacking in specificity, grounded evidence, and comprehensiveness, underestimating concrete dangers.

      This emphasis on procedural failures is crucial, as the DSA focuses on penalizing the lack of adequate supervision and risk management rather than merely the presence of unsafe products. Other large platforms may also have risks, but the Commission's argument centers on Temu's failure to implement the necessary regulatory measures to identify and eliminate hazardous products effectively.

      Temu has until August 28 to submit a remediation action plan in accordance with Article 75 of the DSA. The Commission has indicated it will thoroughly review this plan and may impose additional penalties if the response is found lacking.

      The €200 million fine represents about 0.4% of PDD Holdings' reported $55 billion revenue for 2025, falling on the lower end of the maximum penalty range, which could reach 6% of global annual turnover (approximately $3.3 billion based on the reported figures). This amount appears to be more of a starting point than a deterrent limit.

      It's important to note the broader regulatory framework being established by the Commission. The Digital Services Act, which became effective in 2023 with full application required by 2024, was intended to provide European regulators with tools to enforce compliance among very large online platforms, including those based outside Europe.

      The December fine against X tested this framework with a well-resourced US platform currently challenging the penalty in the EU's General Court. The Temu fine tests the framework against a Chinese platform that operates differently, with a parent company registered in the Cayman Islands and relying on millions of third-party sellers instead of in-house content.

      Regulators have expressed particular concern about Chinese platforms like Temu, where many products come from small vendors shipping directly from China, highlighting the visibility gaps in the supply chain that EU product-safety laws aim to address. Shein, another Chinese platform, is reportedly facing similar investigations.

      The Commission's stance, as evident from the Temu case, is that having a Chinese marketplace structure does not exempt a company from conducting proper risk assessments.

      Additionally, the political context is significant, with the recent release of the Commission's Tech Sovereignty Package, signaling increased scrutiny of Chinese platforms. Apple and Google are contesting Canadian encryption regulations, while Brussels intends to apply the DSA stringently against both US and Chinese companies.

      Overall, the Temu fine aligns with this enforcement-first approach, emphasizing procedural compliance and scalability for repeat offenders. Temu and PDD Holdings have refrained from commenting further, aside from acknowledging the Commission's decision. The upcoming deadline for the action plan in August marks the next significant milestone in this case.