EU opens DSA investigation into Shein over illegal sales and addictive design

The European Commission has opened a formal inquiry under the Digital Services Act into Shein for allegedly facilitating sales of illegal items and deploying engagement mechanics that may damage user wellbeing. The probe will inspect the company’s mechanisms for blocking illicit listings, the transparency of its recommendation models, and gamification features such as points or rewards.

French authorities flagged concerns about child-like sex dolls and urged EU action, and Shein subsequently removed those products globally. The Commission will specifically test systems designed to detect and prevent child sexual abuse material and other illegal listings on the marketplace.

Regulators will audit Shein’s claimed steps: enhanced detection tools, systemic-risk assessments, mitigation frameworks, and age-verification controls for restricted items. The inquiry also targets the transparency and design of Shein’s recommender systems that suggest items to users across its app and web storefronts.

This action follows a similar EU focus on rival platform Temu, which faced charges last year for failing to properly assess illegal product risks. A ruling on Temu could arrive this year, setting a procedural precedent for Shein’s case.

Under the DSA, platforms found non-compliant can face penalties reaching 6% of global annual turnover, making potential fines the primary material risk. The investigation elevates compliance, algorithm audits, and product screening to board-level priorities for large marketplaces operating in Europe.

A finding of abuse or design-driven harm would force platform redesigns and sustained investment in content moderation technology. That would increase operating costs and could alter commercial strategies for low-price importers that rely on rapid, high-frequency user engagement.

European scrutiny is now explicitly extending from illegal listings to behavioural design and algorithmic transparency. Firms will need documented systemic-risk assessments and verifiable mitigation steps to demonstrate DSA compliance.

For Shein, the probe creates reputational exposure and potential operational constraints across EU markets. It also signals to other global marketplaces that user wellbeing and recommendation opacity are enforcement priorities.

Watchpoints include the Commission’s assessment timeline, the technical depth of algorithmic audits, and whether enforcement demands structural changes to reward and recommendation mechanics. Firms facing similar probes should accelerate third-party audits and strengthen age-gating and filtering pipelines.

Investors and competitors will track the outcome closely because remedies could reshape product discovery economics in European e-commerce. The case is likely to influence policy debates on platform accountability and cross-border enforcement collaboration.