On Oct. 29, the European Union's tech regulator said it would launch an investigation into Chinese online retailer Temu to find out whether it had violated rules on preventing the sale of illegal products, a move that could lead to a hefty fine for the company.

Temu, a cross-border e-commerce platform owned by Chinese e-commerce giant Pinduoduo, has 92 million users in 27 EU countries.

The European Commission launched the investigation under the Digital Services Act (DSA) after receiving complaints from the pan-European consumer organization BEUC and its 17 member states. Under the act, mega online platforms such as Temu are required to step up efforts to combat illegal and harmful content on their platforms.

An EU official was quoted as saying, “We suspect that platforms are not taking effective enough measures to actually prevent the spread of illegal products, with unscrupulous merchants reappearing after changing their identity.”

The investigation will also focus on the potentially addictive design of Temu's services, including its game-like rewards program and its system of recommending purchases to users, as well as investigating whether Temu complied with the relevant provisions of the Digital Services Act, which provides researchers with public access to data.

Margrethe Vestager, the EU's head of antitrust and technology affairs, said in a statement, “We want to make sure that Temu complies with the Digital Services Act, in particular to ensure that the products sold on its platform comply with EU standards and are not detrimental to the interests of consumers.”

In response, Temu issued a statement saying, “Temu takes our obligations under the Digital Services Act very seriously and is continually investing in strengthening its compliance systems to safeguard the interests of consumers on its platform.” The company also said it is in talks with the EU to join a voluntary initiative campaign to combat the sale of counterfeit products.

Temu could face fines of up to 6% of its global turnover if found guilty of breaching the Digital Services Act.