With 75 million monthly active users, Temu may become a “super-large platform” in the EU

It is reported that the European Union recently announced that since Temu’s monthly active users in Europe have exceeded 45 million, the platform will be recognized as a very large online platform (VLOP).

This means that Temu will face stricter supervision in Europe, and it also means that the platform may take stricter measures to combat harmful content and counterfeit goods on the platform.

Temu entered the EU market in April last year. The latest data shows that in the six months ending March 31 this year, Temu had an average of about 75 million monthly active users here.

  Speaking of the EU's Digital Services Act ( DSA), I believe many sellers are familiar with it. The bill was passed by the European Commission on October 19, 2022, and took full effect on February 17 this year.

This bill classifies online platforms with more than 45 million users as very large online platforms (VLOP). Once identified as a very large online platform, the platform will be subject to stricter supervision. Once found to have violated the DSA Act, these very large online platforms may face a huge fine of up to "6% of global turnover".

The DSA Act also requires recognized super-large online platforms to pay annual regulatory fees, with the maximum fee ratio being 0.05% of their global annual net revenue; the platform's number of monthly active users and its profit and loss situation in the previous fiscal year will also have an impact on the fees.

According to the process, if designated as a very large online platform, Temu will have a four-month buffer period to cope with stricter regulations and scrutiny.

In addition to the number of 45 million users, there are other criteria for being identified as a VLOP: for example, the company's annual turnover in Europe in the past three fiscal years is ≥ 6.5 billion euros; or the average market value or equivalent market fair value in the previous fiscal year reaches 65 billion euros, and provides core platform services in at least three member states.

As Chinese cross-border e-commerce platforms such as Temu continue to gain a foothold in the EU market and expand their business, DSA is having an increasingly greater impact on Chinese sellers operating in Europe.

The DSA Act requires platforms to take measures to prevent the spread of illegal goods, services or content, so sellers need to be more careful in their operations to avoid crossing the red line and hindering their operations; but the DSA Act also requires platforms to make clear explanations of "reasons for deleting content" or "why account access is restricted", which will help sellers better understand the platform's review decisions and be able to raise targeted objections.

In addition, in order to better prevent the spread of illegal goods, the DSA Act also stipulates that the platform needs to provide verified identity information before sellers start selling goods. This will also help to build trust between buyers and sellers to a certain extent and reduce the occurrence of bad behaviors such as online fraud.

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