The European Commission has launched a formal investigation into the Chinese online retailer Shein, citing concerns over potentially addictive platform design, a lack of transparency in its recommendation systems, and the sale of illegal products, including content linked to the sexual abuse of minors. The investigation, announced Tuesday, is being conducted under the Digital Services Act (DSA), the EU’s landmark legislation aimed at regulating online platforms.
The Commission’s inquiry will focus on the mechanisms Shein has in place to prevent the marketing of prohibited goods within the European Union, specifically items that could constitute child sexual abuse material, such as dolls with a childlike appearance. The move follows significant controversy in France, where Shein faced criticism and calls for the immediate removal of such dolls, prompting scrutiny from authorities regarding potential violations of rules protecting minors and prohibiting the sale of illicit content.
Beyond the sale of illegal products, the investigation will likewise examine the risks associated with Shein’s platform design, including the use of points and rewards systems intended to encourage user engagement. EU officials are concerned that these features could have negative impacts on user well-being and consumer protection. The Commission will also assess the transparency of Shein’s personalized recommendation systems, which suggest content and products to users.
“Today, the Commission has instituted a formal proceeding against Shein under the Digital Services Act due to the platform’s potentially addictive design, lack of transparency in its recommendation systems, as well as the sale of illegal products, including material of child sexual abuse,” the Commission stated in a press release.
The DSA, which came into effect in February 2024, establishes obligations for online platforms to remove illegal and harmful content and protect the fundamental rights of users. It is the first such set of rules globally, and non-compliance can result in substantial fines proportional to a company’s size.
Shein, which has rapidly gained popularity in Europe, has faced increasing scrutiny from European authorities and consumer protection organizations. Concerns have been raised regarding alleged failures to remove illegal and unsafe products, as well as perceived lack of transparency in its business practices. The company stated it will continue to cooperate with EU regulators and has invested in measures to strengthen compliance with EU legislation, including conducting systemic risk assessments and enhancing user protection, particularly for younger users.
The Commission’s investigation is the latest in a series of actions taken under the DSA, signaling a more assertive approach to regulating large online platforms. The EU has develop into the first jurisdiction in the world with rules for digital platforms, obligating them to remove illegal and harmful content.
