Online retail giant Zalando faces toughened regulations for its digital services

Zalando Challenges EU Court Ruling on DSA Classification

In a landmark decision, the EU Court has determined that Berlin-based DAX company Zalando is a platform under the Digital Services Act (DSA) in relation to third-party sales. The ruling, which classified Zalando as a "very large online platform," was made in April 2023 by the EU Commission.

The crux of the matter lies in Zalando's hybrid business model. The company, known for its curated, high-quality products from established and trustworthy brand partners, has argued that the court did not adequately consider this aspect.

According to the EU Commission, Zalando averages 45 million active users per month. However, the company was unable to distinguish who, among the more than 83 million users, was exposed to the content from the partner program. This has been a point of contention for Zalando, which maintains that its selected approach does not pose a "systemic risk" for the spread of harmful or illegal third-party content.

The DSA aims to ensure that platforms quickly remove illegal third-party content from their sites. Very large platforms and search engines, like Zalando, are subject to particularly strict requirements under the DSA. These strict requirements include submitting annual risk assessments and sharing data with authorities and researchers.

After the ruling, Zalando announced that it will appeal the decision to the Court of Justice of the European Union. The company stated that the court did not adequately consider that it offers curated, high-quality products from established and trustworthy brand partners.

It is important to note that the EU Court has ruled that the classification of Zalando as a "very large online platform" by the EU Commission is legally sound. Zalando can file an appeal against the EU General Court's decision at the European Court of Justice (EuGH), which is the highest court in the European Union.

The lawsuit by Zalando against the EU Commission's decision was dismissed by the EU Court. This ruling underscores the stringent requirements that very large platforms must adhere to under the DSA, aimed at ensuring a safer online environment for all users.

Online retail giant Zalando faces toughened regulations for its digital services