Chinese online shopping giant that has become 'headache' for Zara, H&M and Amazon may be in trouble

Chinese online shopping giants Shein and Temu have changed the face fashion ecommerce in the Europe and US. In the United States (US), Shein and Temu have been giving tough time to Amazon; in Europe it is Zara and H&M . The low prices and high assortment offered by Temu and Shein make established retailers in Europe -- like Zara and H&M -- pale in comparison.

Zara & H&M are facing tough time because Shein and Temu are said to undercut prices and turnaround time of these fast fashion retailers in Europe, where ultra-fast fashion has become the new thing.

Now it seems, Temu may be under scanner in Europe. Chinese online retailer Temu is reportedly facing a European Union investigation over suspicions it’s failing to prevent the sale of illegal products. According to a report by news agency AP, the 27-nation bloc's executive arm -- the European Commission -- has opened its investigation against Temu. This comes five months after Temu was added to the list of “very large online platforms” needing the strictest level of scrutiny under the bloc's Digital Services Act .

Why is Temu under investigation in Europe
The European Commission is said to be investigating the platform for potential violations of the Digital Services Act (DSA), specifically regarding consumer protection, fair competition, and data privacy.

The EU's concerns center around the sale of non-compliant goods, addictive design features, and transparency of recommendation algorithms. Regulators are particularly worried about the ease with which "rogue traders" can resurface on the platform after being suspended.

Temu, owned by Chinese e-commerce giant Pinduoduo , has responded by affirming its commitment to complying with EU regulations and protecting consumer interests. However, the company now faces the possibility of significant fines if the investigation uncovers serious violations.

This scrutiny comes amid a broader European effort to regulate tech giants and ensure a fair digital marketplace. Other platforms like AliExpress , X, and TikTok have also faced similar investigations, highlighting the EU's determination to enforce stricter rules on online businesses.