Alibaba Group Holding Limited (NYSE:BABA) rival PDD Holdings Inc's (NASDAQ:PDD) Temu will be subject to stringent EU online content regulations that currently affect major tech firms like Meta Platforms Inc (NASDAQ:META), Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, Elon Musk's X, and TikTok.

This development follows as Temu's average monthly users in Europe surpassed the significant threshold of 45 million.

According to the European Union's Digital Services Act (DSA), platforms with over 45 million users are considered massive online platforms (VLOPs) and must undertake more significant efforts to eliminate illegal and harmful content and counterfeit products on their sites, Reuters reports.

Having launched in the EU market in April of the previous year, Temu reported approximately 75 million average monthly active users in the European Union for the six months ending March 31 this year.

The European Commission has acknowledged that Temu's user figures have crossed the DSA threshold and has initiated contact with the platform regarding a potential future designation as a VLOP.

The Chinese-founded fast-fashion giant Shein also reported having 108 million active users on average in the 27-country bloc last month. Shein is engaging with the Commission about its possible designation under the DSA.

In March, PDD reported fourth-quarter fiscal 2023 revenue growth of 123% year-on-year to $12.52 billion, beating the consensus of $11.01 billion. The adjusted earnings per ADS of $2.40 increased from CNY8.34 Y/Y, beating the consensus of $1.60.

PDD stock gained 68% in the last 12 months. Investors can gain exposure to the stock via Global X MSCI China Consumer Discretionary ETF (NYSE:CHIQ) and Invesco China Technology ETF (NYSE:CQQQ).

Price Action: PDD shares traded higher by 1.09% at $116.76 in the premarket on the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.