Pinduoduo

Counterfeit products

Pinduoduo has been significantly criticised in domestic Chinese media for selling shanzhai products.[24] The company responded with an open letter stating that it had, in a single week in August, shut down 1,128 stores, taken down more than 4 million listings, and blocked 450,000 suspected counterfeit goods listings from being published.[25]

After it was listed on the U.S. Nasdaq stock exchange in 2018, China's State Administration for Market Regulation announced probes into the firm based on reports of counterfeit materials available on the platform.[26][24] Pinduoduo responded by intensifying efforts to remove counterfeit materials from its store.[24] According to the company, it removed over 10.7 million suspicious items and blocked 40 million suspicious links on its platforms.[24] Pinduoduo sought to reassure customers by stating that it would compensate customers with ten times the value of any counterfeit item found to have been sold through the platform.[24] This was three times as much as the compensation mandated by China's Consumer Protection Law.[24]

Pinduoduo also introduced a penalty on sellers of items under which it would freeze ten times the trading volume of any item found to be counterfeit.[24] One thousand sellers responded with a protest in July 2018 at the company's headquarters, during which there were physical clashes with the company's security guards.[24] Sellers have also challenged Pinduoduo's penalty in court, but as of at least 2021 Pinduoduo won a significant majority of these cases.[24]

In April 2019, Pinduoduo was first named in the Office of the United States Trade Representative's list of Notorious Markets for Counterfeit Products and Piracy.[27][28][29] As of 2023, Pinduoduo remains listed as a notorious market.[30]

The company also disclosed that it had removed 500,715 items and closed more than 40 stores as of February 4, 2020, to protect consumers from counterfeit and substandard masks being sold by merchants hoping to profit amid the COVID-19 pandemic.[31]

In April 2024, U.S. Sen. Tom Cotton (R-Ark.) and former Sen. Marco Rubio (R-Fla.) wrote letters to the Biden administration, raising concerns about Temu and connections to forced labor and intellectual property theft.[32] At least 20 states have filed consumer fraud litigation against the company over its labor practices and fraud concerns.[32]

Malware concerns

In 2023, Google removed Pinduoduo's app from the Play Store after a Chinese cybersecurity firm found malware in app versions carried in Chinese app stores.[33][34] Two days after releasing an update to address concerns, Pinduoduo disbanded the team of engineers and product managers who had developed the exploits. A majority of the team was transferred to Temu, working in various departments.

Six cybersecurity teams interviewed by CNN – including Finnish, Russian, US, and Israeli firms – as well as Chinese cybersecurity firm DarkNavy, all labeled Pinduoduo as malware or potential malware.[35] In a report by Bloomberg News, a researcher from Kaspersky Labs stated the following: "Some versions of the Pinduoduo app contained malicious code, which exploited known Android vulnerabilities to escalate privileges, download and execute additional malicious modules, some of which also gained access to users' notifications and files".[36]

Pinduoduo maintains a data sharing agreement with a unit of the People's Daily, the official newspaper of the Central Committee of the Chinese Communist Party.[37]

Non-compete agreements

In 2024, the Financial Times and The Wall Street Journal reported that Pinduoduo sued several former employees for violating non-compete clauses. The evidence Pinduoduo submitted to court includes video recordings of the former employees going to work for Pinduoduo's rivals. The company said it does not "engage in any illegal or unethical surveillance practices of current or former employees."[38][39]