Month: October 2024

LONDON — The European Union is investigating Chinese online retailer Temu over suspicions it’s failing to prevent the sale of illegal products, the 27-nation bloc’s executive arm said on Thursday.

The European Commission opened its investigation five months after adding Temu to the list of “very large online platforms” needing the strictest level of scrutiny under the bloc’s Digital Services Act. It’s a wide-ranging rulebook designed to clean up online platforms and keep internet users safe, with the threat of hefty fines.

Temu started entering Western markets only in the past two years and has grown in popularity by offering cheap goods — from clothing to home products — that are shipped from sellers in China. The company, owned by Pinduoduo Incorporated, a popular e-commerce site in China, now has 92 million users in the EU.

Temu said it “takes its obligations under the DSA seriously, continuously investing to strengthen our compliance system and safeguard consumer interests on our platform.”

“We will cooperate fully with regulators to support our shared goal of a safe, trusted marketplace for consumers,” the company said in a statement.

European Commission Executive Vice President Margrethe Vestager said in a press release that Brussels wants to make sure products sold on Temu’s platform “meet EU standards and do not harm consumers.”

EU enforcement will “guarantee a level playing field and that every platform, including Temu, fully respects the laws that keep our European market safe and fair for all,” she said.

The commission’s investigation will look into whether Temu’s systems are doing enough to crack down on “rogue traders” selling “noncompliant goods” amid concerns that they are able to swiftly reappear after being suspended. The commission didn’t single out specific illegal products that were being sold on the platform.

Regulators are also examining the risks from Temu’s “addictive design,” including “game-like” reward programs, and what the company is doing to mitigate those risks.

Also under investigation is Temu’s compliance with two other DSA requirements: giving researchers access to data and transparency on recommender systems. Companies must detail how they recommend content and products and give users at least one option to see recommendations that are not based on their personal profile and preferences.

Temu now has the chance to respond to the commission, which can decide to impose a fine or drop the case if the company makes changes or can prove that the suspicions aren’t valid.

Brussels has been cracking down on tech companies since the DSA took effect last year. It has also opened an investigation into another e-commerce platform, AliExpress, as well as social media sites such as X and Tiktok, which bowed to pressure after the commission demanded answers about a new rewards feature.

Temu has also faced scrutiny in the United States, where a congressional report last year accused the company of failing to prevent goods made by forced labor from being sold on its platform.
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The crowd-sourced fact-checking feature of Elon Musk’s X, Community Notes, is “failing to counter false” claims about the U.S. election, the Center for Countering Digital Hate (CCDH) said in a report Wednesday.

Out of the 283 misleading posts that CCDH has analyzed on the digital social media platform, 209 or 74% of the posts did not show accurate notes to all X users correcting false and misleading claims about the elections, the report said.

“The 209 misleading posts in our sample that did not display available Community Notes to all users have amassed 2.2 billion views,” CCDH said, urging the company to invest in safety and transparency.

X did not immediately respond to a Reuters request for comment.

X launched its “Community Notes” feature last year, which allows users to comment on posts to flag false or misleading content, in effect crowd-sourcing fact checking to users rather than a dedicated team of fact checkers.

The report comes after X lost a lawsuit brought by CCDH earlier this year that faulted it for allowing a rise in hate speech on the social media platform.

Social media platforms, including X, have been under scrutiny for years over the spread of misinformation and conspiracy theories, including false information about elections and vaccines.

Secretaries of state from five U.S. states urged billionaire Musk in August to fix X’s AI chatbot, saying it had spread misinformation related to the November 5 election.

Musk, who endorsed Republican presidential candidate Donald Trump in July, himself has been accused of spreading misinformation. Polls show Trump is in a tight race with Democratic Vice President Kamala Harris.
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