The European Commission confirmed the penalty on Thursday, saying the Chinese e-commerce company did not properly identify and manage risks linked to products sold to EU consumers.

The case sits under the Digital Services Act, a law that governs large online platforms.

The Commission opened its investigation in 2024, shortly after Temu expanded further across Europe. It followed complaints from the European Consumer Organisation (BEUC) and 17 of its national members.

Regulators said those complaints pointed to unsafe goods circulating widely on the platform.

Officials also carried out mystery shopping tests. A high number of phone chargers failed basic safety checks, while several baby toys also contained chemicals above legal limits or created choking risks.

The EU said Temu did not go far enough in assessing how its systems might increase those risks. It pointed to product recommendation tools and influencer-linked promotions that could push more unsafe goods into view.

Henna Virkkunen, a European Commission official responsible for technology, criticised the company’s approach.

She said “the company’s assessment of its risks leaves regulators, users, and the public in the dark about the true scale of potential harm posed by illegal products sold on Temu,”

“Now it is time for Temu to comply with the law,” she added.

The Commission said the platform must now submit a compliance plan by August 28, 2026. Officials will review the plan two months after submission to decide if Temu has met its obligations.

Temu responded to the decision and rejected parts of the findings. A spokesperson said: “Temu respects the objectives of the Digital Services Act and the need for clear, consistent rules across the digital economy. However, we disagree with the European Commission’s decision and consider the fine to be disproportionate,”

The company added: “The decision relates to our first DSA assessment in 2024 and does not reflect the current state of our systems. Temu engaged constructively with the Commission throughout the process and has since taken further steps to strengthen risk assessment, platform governance, and user protection,”

Temu also said it would continue to work with regulators and consider its options.

The penalty is the second enforcement action under the Digital Services Act. It is also the largest fine issued so far under the law. The first was against X, which faced a penalty over transparency issues.

The law requires large platforms to identify and reduce systemic risks. It also demands stronger oversight of illegal or harmful products, along with clearer information on how recommendation systems operate.

Beyond Temu, the EU investigation also revealed issues about low-cost imports from China. Officials have been placing focus on large online marketplaces as part of trade and consumer protection efforts.

Other platforms are also under review. Shein and AliExpress are both facing separate investigations linked to unsafe or counterfeit goods.

Meanwhile, JD.com is under examination over its planned purchase of German retailer Ceconomy, with regulators questioning whether foreign subsidies may distort competition.

There is also a policy debate inside the EU, with officials discussing new trade and industrial measures aimed at balancing competition with Chinese e-commerce firms and protecting local businesses.

The issue has also reached the global level. In the United States, Temu stopped shipping directly from China after a policy change closed a duty exemption on low-value imports.

Following a mystery shopping operation led by the Commission, inspectors found that a number of items sold on Temu, including baby toys and small electronics, did not meet EU safety standards. Many of these items were direct threats to users, such as choking hazards, electrocution risks, and potential exposure to toxic substances. 

These findings were supported by the European consumer watchdog BEUC, which has long raised alarms about the unchecked inflow of unsafe imports via online platforms.

The Commission concluded that Temu’s October 2024 risk assessment was both flawed and superficial. Instead of analysing data specific to its own operations, Temu allegedly relied on vague, industry-level information to justify compliance. That approach, the Commission noted, is not acceptable for a platform with the scale and influence of Temu.

“The evidence showed that there is a high risk for consumers in the EU to encounter illegal products on the platform,” the Commission stated. “Specifically, the analysis of a mystery shopping exercise found that consumers shopping on Temu are very likely to find non-compliant products among the offer, such as baby toys and small electronics.”

Temu, which is classified as a Very Large Online Platform (VLOP) under the DSA, is subject to stricter regulatory expectations, particularly around product safety, algorithm transparency, and user protections. These platforms are not only required to remove harmful content and goods quickly but must also actively mitigate systemic risks on their platforms.

If the preliminary findings are upheld, Temu could face a fine of up to 6% of its global annual turnover, a penalty that could easily exceed $1.5 billion, given the financial muscle of its parent company, PDD Holdings. This would represent one of the most forceful enforcement actions under the DSA since its implementation.

In response to the Commission’s findings, Temu in an official statement said, “We will continue to cooperate fully with the Commission.”

Before now, EU also flagged the platform’s gamified shopping experience, pointing to potentially manipulative features such as fake discounts, time-limited rewards, and addictive design patterns aimed at encouraging compulsive buying. 

These dark patterns, tactics designed to nudge users into decisions against their best interest, are being investigated for violating transparency and ethical standards under EU law.

Furthermore, regulators are probing how Temu’s recommendation systems work. The core question is whether the platform gives users the option to receive non-profiled suggestions, an essential requirement under the DSA designed to protect user privacy and prevent algorithmic exploitation.

The EU’s investigation into Temu puts it in the same regulatory spotlight as other China-based platforms such as Shein, AliExpress, and Wish, all of which have been warned for allowing the sale of unsafe products and employing manipulative design features.

In parallel, EU policymakers are also debating the removal of the €150 duty-free threshold for imported parcels. This change would hit Temu’s core business model hard, as the platform thrives on high-volume, low-cost deliveries that currently escape import taxes.

For now, Temu has a limited window to respond to the Commission’s findings before a final decision is made. 

The company argues that the fine and the obligations tied to it go far beyond what the law actually requires.

The issue traces back to the European Commission’s April ruling, which found Apple guilty of restricting app developers from directing users to cheaper alternatives outside the App Store.

According to the Commission, Apple’s actions violated the Digital Markets Act (DMA), a law designed to curb the dominance of major tech companies.

On Monday, the final day allowed for a legal challenge, the iPhone maker submitted its appeal. In a statement, Apple said:

“Today we filed our appeal because we believe the European Commission’s decision—and their unprecedented fine—go far beyond what the law requires. As our appeal will show, the EC is mandating how we run our store and forcing business terms which are confusing for developers and bad for users. We implemented this to avoid punitive daily fines and will share the facts with the Court.”

The company believes the European Commission is now telling it how to manage its own business in ways that damage the developer community and worsen user experience.

In June, Apple tried to revise its App Store policies across the European Union to comply with the DMA and avoid further daily fines, which could have reached as high as €50 million per day, about 5% of Apple’s average daily global turnover.

The changes Apple introduced, however, have triggered new controversy. The company unveiled a complex, tiered commission system: developers now face either a 5% or 13% fee, plus a separate 2% user acquisition charge if they want better visibility in the App Store, such as appearing in search suggestions or getting promotional spots. Apple insists these adjustments were forced by the Commission’s demands.

The company is also now allowing developers to steer users to payment options outside the App Store, but Apple claims the Commission’s definition of “steering” was unlawfully expanded, covering more developer activities than it should.

While Apple argues that no other app store in the world operates under such conditions, the European Commission is pressing ahead. It is currently gathering feedback from developers to assess whether Apple’s latest changes are sufficient or if more corrective measures will be needed.

Over the years, the European Commission has issued fines against several tech giants, including Alphabet’s Google, which has accumulated more than $8 billion in penalties. Apple itself was previously ordered to pay Ireland €13 billion in back taxes.

Apple’s latest appeal adds yet another chapter to its long-running legal battles over the control and structure of its App Store, not just in Europe, but globally. In the United States, Apple has already been forced to allow developers to direct users to external payment options, potentially threatening billions in annual revenue.