Temu, AliExpress is under investigation by the South Korean FTC

Temu and AliExpress could face regulatory hurdles in South Korea.

According to Pulse News, a South Korean business publication, South Korea’s Fair Trade Commission (FTC) has begun investigating the two companies, owned by PDD Holdings and Alibaba Group, respectively.

Pulse News reported that the investigations will analyze both companies’ terms and conditions to determine whether they violate consumers’ privacy by unnecessarily collecting and disseminating information about them.

In April, The Korea Times reported that South Korea’s regulator had also opened an investigation into Temu for false advertising and other unfair business practices. It will also focus on whether Temu adequately protects its consumers in South Korea.

As of March, AliExpress had nearly 9 million monthly active users (MAUs) and Temu had over 8 million MAUs, according to KED Global, a South Korean news outlet. The two have started making inroads into Korean Coupang, which has over 30 million MAUs.

South Korea isn’t the only government scrutinizing Temu, AliExpress and competitor Shein. Reports from The Korea Times, Reuters and other media outlets did not mention Shein as a target of South Korea’s FTC, but the company faces investigations from other governments.

Temu could in the near future be designated as a very large online platform (VLOP) under the European Union’s Digital Services Act. AliExpress already has VLOP status, as do Shein and Amazon. The threshold in the EU bloc is 45 million MAUs or more. In March, Temu reported that it had about 75 million users in the EU.

This designation ensures that VLOPs must adhere to stricter rules for their services that, among other things, take into account the welfare of consumers.

Regulators in the US are also keeping an eye on Temu, Shein and other market companies. Politicians like Marco Rubio and Sherrod Brown have called on the U.S. to reevaluate the de minimis rule, which allows companies to import low-cost shipments directly to consumers without taxes, tariffs or customs inspection.

Temu and Shein have both started building logistics relationships and marketplaces in the US, which could help them circumvent some of the regulatory scrutiny they appear to face in the country.

Even though Shein, AliExpress and Temu are under scrutiny, they continue to expand their user base worldwide due to their ultra-low prices and gamified shopping experiences.