8-minute read | 1,650 words
What to know this week
The EU has fined Temu for breaching the DSA.
The European Commission has fined Temu €200 million for breaching the regional bloc’s Digital Services Act (DSA).
Trump signs reduced AI EO.
President Trump has signed a new Executive Order (EO) focused on artificial intelligence (AI) and cybersecurity.
This week's full stories
EU fines Temu 200 million Euros for breaching the DSA.
THE NEWS
Last week, the European Commission issued a €200 million fine against Temu for breaching the DSA. When issuing the fine, the Commission argued that Temu failed to adequately assess the systemic risks posed by illegal and unsafe products sold to consumers across the EU. The Commission also cited deficiencies in Temu’s assessment of risks associated with its recommendation systems and influence affiliate program.
When announcing the fine, European Commission’s Executive Vice President for Tech Sovereignty, Security, and Democracy Henna Virkkunen stated:
“Risk assessments are not box-ticking exercises, they are the backbone of the DSA. Temu’s risk assessment underestimates concrete risks, lacks specificity, is not grounded in solid evidence, and is not comprehensive.”
A Temu spokesperson commented on the fine, stating:
“Temu respects the objectives of the DSA and the need for clear, consistent rules across the digital economy. However, we disagree with the European Commission's decision and consider the fine to be disproportionate. The decision relates to our first DSA assessment in 2024 and does not reflect the current state of our systems.”
This is the largest fine imposed under the DSA, surpassing the previous €120 million fine levied against X in December 2025 for platform transparency failures. Further, this fine only closes one of four different investigation strands launched by the Commission dating back to October 2024. Other strands are looking at addictive design features, recommender system transparency, and research data access.
THE KNOWLEDGE
This fine comes as the EU is preparing to apply additional pressure on Chinese e-commerce companies as a whole. The Temu fine also comes as the EU prepares additional measures targeting Chinese e-commerce imports. This new fee will charge three euros on all parcels under €150 entering the EU from China.
Additionally, the EU is also using the DSA to impose greater scrutiny on AliExpress and Shein. For AliExpress, the EU and the company reached a binding commitment with the Commission last year over similar risk management concerns to avoid a fine but remain under a monitoring trustee. For Shein, the company was designated a very large online platform in 2024 and formal proceedings were opened in February 2026 to investigate illegal product sales, recommender system transparency, and the compulsive use of addictive features.
Outside of placing greater pressure on Chinese e-commerce platforms, the EU has also been looking to reduce the region’s needs on American technology firms. On Monday, the regional body released a draft version of its new cloud rules.
In these rules, the European Commission imposed the following:
- Including mandatory “non-price” criteria for public tenders, including requirements for software and hardware developed within the EU.
- Imposing strict sovereignty criteria for cloud computing services in “highly critical state tenders.”
While these rules could be changed, they are indicative of what the regional body’s policy goals are.
As the EU continues to place pressure on foreign technology firms and large platforms, the DSA will likely continue to be a primary method for the Commission to place additional pressure on firms to either make substantial platform changes or leave the EU.
THE IMPACT
With this fine, Temu has until August 28th to submit an action plan detailing how it remedy its failures. The European Board for the DSA will then issue its opinion and decide if the plan is adequate and set an implementation timeline.
However, this penalty represents only one of four major investigations the platform is facing. Should the Commission reach similar conclusions, Temu could face additional fines and be forced to make significant platform changes.
More broadly, the decisions signal that the EU is prepared to use the DSA as more than a content moderation framework. By targeting risk assessments, recommender systems, and marketplace governance, regulators are expanding the law’s reach into the core operational practices of large digital platforms.
The case also highlights a wider shift in European policy. Alongside new import fees on Chinese goods and increased platform scrutiny, the EU is pursuing a strategy that combines consumer protection, digital sovereignty, and industrial policy. As a result, foreign technology and e-commerce firms operating in Europe may face growing pressure not only to comply with stricter regulations but also to adapt their business models to align with the region’s broader economic and strategic objectives.
Trump signs new EO focused on AI.
THE NEWS
On Tuesday, President Trump signed a new EO centered around AI and cybersecurity. The new EO, also known as the Promoting Advanced AI Innovation and Security order, focuses on directing national security agencies to bolster their cybersecurity capabilities alongside creating a “cybersecurity clearinghouse.”
In the EO, President Trump wrote:
“Advanced AI capabilities make our Nation stronger, but also introduce new national security considerations that require coordinated action across executive departments and agencies, and components.”
More specifically, the EO directs federal agencies to do the following:
- Prioritize the cyber defense of national security systems across the federal government.
- Facilitate the access to cybersecurity tools and services including for frontier AI models at the federal, state, and local levels.
- Create and expand federal programs and services that enhance AI enabled defensive tools.
- Expand the US Tech Force Information Cybersecurity Specialist hiring and placement pathways.
- Direct agencies to develop and maintain a classified benchmarking process to assess advanced frontier AI model capabilities.
- Create a voluntary framework with AI developers to better engage with the federal government and give quicker access to new models.
Notably, the current version of this EO is less restrictive than the previous AI focused order being considered over the last few weeks.
THE KNOWLEDGE
Though this latest EO does establish some federal guidelines and efforts to improve AI security and oversight, this order is noticeably less involved than the previous iteration was reported to be. For context, that EO was originally designed in response to Anthropic selectively releasing its latest cybersecurity model, Claude Mythos. Given the potential impacts this model could have on a variety of critical infrastructure sectors and the severity if an attacker were able to misuse it, it is not surprising that the Trump administration was looking to pivot away from its deregulated AI stance.
The original version of the EO would have mandated the creation of a new federal oversight board. This board would have been tasked with overseeing and reviewing models before they were released to the general public. However, the administration ultimately moved away from the more restrictive proposal. Reports suggested that policymakers became increasingly concerned that stringent pre-release oversight could slow domestic AI development and potentially weaken US competitiveness against China.
THE IMPACT
Though this EO is a more toned down version of the one being previously considered, this does represent a notable shift in the Trump administration’s stance on AI. While it is unlikely that the administration will implement a more restrictive policy in the short-term, given that they already walked away from the previous iteration, it does show that the administration is shifting its overall AI policy.
Previously, the administration wanted to deregulate this space, even if that meant actively subverting state AI laws through federal preemption. However, this EO suggests that the administration recognized certain frontier AI systems may pose cybersecurity and national security risks that warrant at least some level of federal coordination and oversight.
While the EO stops well short of establishing a formal AI regulatory regime, it signals that even an administration generally supportive of deregulation now views advanced AI as a national security issue requiring federal coordination. The success of this approach will likely determine whether future administrations pursue similarly targeted safeguards or return to broader oversight proposals.
This Week's Caveat Podcast: Florida vs OpenAI.
Dave Bittner and Ben Yelin look at two stories. The first involves Florida filing a lawsuit against OpenAI, alleging that the AI company prioritized profits over safety measures. The second story looks at recently published research that looks at ad-based geolocation surveillance technology. In their findings, researchers uncover how a geolocation surveillance system called Webloc uses ad-based data to monitor hundreds of millions of people across the globe.
OTHER NOTEWORTHY STORIES
Ring sued over facial recognition feature.
What: Amazon was sued over privacy concerns related to Ring’s “Familiar Faces” feature.
Why: On Monday, Charles Sigwalt filed a lawsuit against Amazon in federal court. In the lawsuit, the plaintiff alleges that Ring’s “Familiar Faces” feature retains images of passersby without their consent. With the lawsuit, he is seeking at least $5 million in damages.
For context, this feature is an optional one that uses artificial intelligence to identify and remember people when they return to a location.
In the suit, the plaintiffs write that people “did not consent to have their privacy rights violated at the entrance way.”
This is not the first time Ring has been sued over privacy violation allegations. In 2023, Amazon settled a case for $5.8 million.
JUNE 2, 2026 | Source: Reuters
China expands curbs on foreign deals.
What: China issued new rules to tighten how foreign companies can invest in domestic companies.
Why: On Sunday, China issued new rules to curb foreign companies from engaging with domestic technology firms, especially those connected to data and national security priorities. The State Council published these new rules giving Beijing the power to punish foreign firms when their home nations restrict Chinese investment. Through this framework, Chinese authorities are looking to formalize powers that let them unwind completed transactions.
These new rules were created after Meta announced its acquisition of Manus. Previously, Chinese authorities stated that this acquisition violated foreign investment laws.
The framework is set to take effect July 1st.
JUNE 1, 2026 | Source: Reuters