Report from EuroNews
In Brief – The European Commission has announced a formal investigation of Chinese ecommerce platform Shein under the Digital Services Act (DSA), 2022 legislation regulating how digital platforms address illegal and objectional content. Platforms with over 45 million active EU users are designated Very Large Online Platforms (VLOPs) and face enforcement by the Commission itself. There are currently 25 VLOPs, including online commerce marketplaces AliExpress, Amazon, Shein, Temu and Zalando. The investigation focuses on the possible sale of illegal products, the use of potentially addictive design features that encourage excessive user engagement, and a lack of transparency in the platform’s recommender systems. Shein says that it has invested significantly in strengthening DSA compliance and is cooperating with commission investigators.
Context – Although the DSA was often described as a response to online hate speech, disinformation, and threats to children, the Commission always argued that the law covers all platforms that can expose their users to illegal content, including online marketplaces for physical or digital goods. The Commission’s DSA investigation follows on the heels of aggressive criticism of Shein in France by retail and government authorities. After Shein opened its first physical shop in Europe in a Paris department store in early November, which drew shoppers and protestors, the French Finance Ministry and the Paris public prosecutors’ office separately moved to block Shein’s website. The Finance Ministry dropped its effort when Shein ended third-party sales in France, and a Paris court rejected the prosecutor’s motion. The CEO of a French grocery store chain has called for Shein and Temu to be banned in Europe entirely for two years while new rules to regulate them are crafted, and a coalition of French retailers and brand owners have filed a €3 billion class action lawsuit accusing the Shein of unfair competition. Shein is the fourth China-based VLOP facing a DSA investigation, following TikTok, AliExpress, and Temu, giving EU officials a talking point against charges that their tech regulations discriminate against US companies.