Online retail giant Zalando faces tighter regulations for its digital services, as authorities seek to ensure compliance with stricter guidelines. - Online retailer Zalando faces tighter regulations for its digital operations
The European Union's (EU) highest court has ruled that online retailer Zalando, with its hybrid business model, falls under the category of a "very large online platform" under the Digital Services Act (DSA). This decision, announced in Luxembourg, dismisses a lawsuit by Zalando against the corresponding DSA decision of the EU Commission.
As a very large platform, Zalando is subject to particularly stringent requirements, such as submitting annual risk assessments and sharing data with authorities and researchers. The EU Commission classified Zalando as such in April 2023, based on an average of 83 million active users per month in the EU.
Zalando's business model combines the sale of its own products and products from third-party partners within a partner program. However, the court ruling has deemed Zalando a platform for third-party sales under the DSA.
In a statement, Zalando expressed its intention to appeal the decision to the Court of Justice of the European Union. The company believes the court did not adequately consider that Zalando offers curated, high-quality products from established and trustworthy brand partners. Zalando also stated that it was unable to distinguish which of its users had been exposed to the content from the partner program, leading to all users being counted.
Despite these concerns, the court ruling upholds the stricter rules for Zalando under the DSA, which aims to ensure that platforms quickly remove illegal third-party content from their sites. The EU's Digital Services Act applies to Zalando, as it does to all large online platforms operating within the EU.
Notably, Zalando exceeds the relevant threshold of an average of 45 million active users per month, according to the EU Commission. However, the court ruling dismisses Zalando's argument that it does not pose a "systemic risk" for the spread of harmful or illegal third-party content due to its selected approach.
As the case progresses, Zalando and the EU Commission will continue to navigate the complexities of the Digital Services Act and its implications for large online platforms.
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