The European Union is going on the offensive against Shein. Citing the Digital Services Act (DSA)—the legislation that allows the EU to regulate the digital environment for businesses—the EU has announced the opening of a formal investigation into Shein. The Chinese company is accused of selling illegal items in certain member states and of creating addiction among users. The Asian giant had previously been criticized by the French government for offering child pornography-themed sex dolls on its e-commerce site.
Risks of Addiction and Illegal Products
Brussels therefore aims to verify the limits Shein has imposed on itself regarding the sale of illegal items, while also examining whether the design of the Chinese company’s apps creates addiction among users. Among the key issues is an analysis of the risks associated with awarding points or rewards to website visitors.
“In the EU, illegal products are banned, whether they’re on store shelves or on online marketplaces,” explained Henna Virkkunen, the Commission’s Vice President for Technological Sovereignty. “The Digital Services Act ensures the safety of buyers, protects their well-being, and informs them about the algorithms they interact with.”
Algorithm Transparency and Profiling
The recommendation system, which suggests new products for customers to buy, will also have to be closely scrutinized to ensure it complies with the transparency requirements of the Digital Services Act. In its memo, Brussels further notes that EU legislation requires companies to offer at least one option that does not involve user profiling.
Shein—although it has long been in the crosshairs of European institutions—is not the only digital player under investigation: recently, for example, the EU has opened numerous investigations, again under the DSA, into the social media platform TikTok.