Updated April 26th, 2024 at 16:57 IST

Shein faces EU scrutiny as very large online platform status brings tighter rules

The European Union designated Chinese-founded fast-fashion company Shein as a very large online platform (VLOP) after it reported a huge number of users.

Reported by: Business Desk
Shein | Image:Shutterstock
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EU regulates Shein: Shein, the Chinese-founded fast-fashion giant, is facing stricter regulations from the European Union (EU) as it has been designated as a Very Large Online Platform (VLOP). The EU announced this designation on Friday, citing Shein's massive user base as the reason.

Under the EU's Digital Services Act (DSA), companies with over 45 million users are classified as VLOPs and are subjected to more stringent rules regarding online content. These rules require them to take more proactive measures in combating illegal and harmful content, as well as counterfeit products, on their platforms.

In response, Shein expressed its focus on complying with these regulations. Leonard Lin, Shein's global head of public affairs, stated, “We share the Commission’s ambition to ensure consumers in the EU can shop online with peace of mind, and we are committed to playing our part.”

Shein's EU expansion

Shein expanded its marketplace into the EU in August of the previous year and is currently considering an initial public offering (IPO) in the United States.

The DSA, which came into effect on February 17, applies to all online platforms. Sixteen tech companies, including Amazon.com, Apple, Alibaba, Microsoft, and three pornography sites, are amongst those subject to the DSA. The EU has requested information from some of these companies regarding the measures they have taken to address illegal content and goods sold online.

Furthermore, the EU is already investigating social media platform X and ByteDance's TikTok for potential violations. Companies found in violation of the DSA could face fines of up to 6 per cent of their global turnover.

(With Reuters Inputs)

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Published April 26th, 2024 at 16:57 IST