Shein to face tough EU online content rules as users in region soar

Chinese-founded fast-fashion company Shein is set to face stricter EU online content rules after reporting a huge number of users, joining a group of companies that includes Meta Platforms META.O, Alphabet’s GOOGL.O Google, Elon Musk’s X and TikTok.

The new rules, known as the Digital Services Act (DSA), classify companies with more than 45 million users as very large online platforms (VLOPs) and require them to do more to fight illegal and harmful content as well as counterfeit products on their platforms.

Shein, which is eyeing a U.S. initial public offering, launched its marketplace in the EU in August last year.

“We calculated that from August 1, 2023 to January 31, 2024, SHEIN had an average of 108 million monthly active users across EU member states,” the company said on its website.

The European Commission said it was aware of Shein’s number of users.

“(We) are in contact with the platform in view of a possible designation in the future. The procedure is ongoing but a timetable cannot be indicated,” a Commission spokesperson said.

Shein did not immediately respond to requests for comment.

The DSA applies to all online platforms since Feb. 17.

Sixteen tech firms, including Amazon.com AMZN.O, Apple AAPL.O, Alibaba 9988.HK, Microsoft MSFT.O and three pornography sites, are currently subject to the DSA, with the bloc asking some of the companies for information on measures they have taken to counter illegal content and goods sold online.

The EU is already investigating social media company X and ByteDance’s TikTok. Violations can result in fines of as much as 6% of a company’s global turnover.

The clampdown could come as another setback for Shein’s IPO, as the company is seeking Beijing’s nod to go public in a listing that will likely face tough scrutiny from U.S. regulators.

Bloomberg was the first to report that Shein was set to come under the DSA rules.