Zalando loses appeal against European Commission’s designation of Very Large Online Platform

The General Court has ruled that Zalando is indeed a so-called Very Large Online Platform (VLOP), meaning that the retailer is bound by the rules dictated by the Digital Services Act (DSA).

In 2021, the European Parliament approved the Digital Services Act (DSA). With this new legislation, Brussels aims to better protect consumers and internet users from the power of large tech companies, such as Google and Meta.

Among other things, the DSA requires companies to be transparent about the recommendation systems and algorithms used by their platforms. Furthermore, they must protect their users from consuming illegal and harmful content.

Since February 2024, the DSA has applied to all marketplaces, social networks, search engines, cloud providers, online travel and accommodation platforms, internet providers, and content sharing services with 45 million or more monthly active users.

Companies and organizations that fail to comply with the requirements that are summed up in the DSA risk a fine of up to six percent of their global annual turnover. The European Commission may also choose to impose penalties of up to five percent of average daily revenue.

In June 2023, immediately after the European Commission introduced a list containing the names of 19 VLOPs, Zalando announced that it would challenge the EU’s executive branch’s decision to include the company.

On Wednesday, the General Court dismissed Zalando’s appeal against the designation as a Very Large Online Platform. According to the judges, the online retailer has over 83 million monthly active users, which is well over the threshold of 45 million. Based on the gross value of sales generated under the Partner Program, Zalando calculated that it had around 30 million monthly active users.

The General Court also rejects Zalando’s arguments that the rules of the DSA relating to the classification of Very Large Online Platforms violate the principles of legal certainty, equal treatment, and proportionality.

“It emphasises in particular that marketplaces can be used to facilitate the marketing of dangerous or illegal products to a significant part of the Union’s population,” the General Court ruled.

“Today's judgment confirms once again that the DSA is a non-discriminatory tool. It applies to all online platforms in the EU, including European ones like Zalando,” a spokesperson for the European Commission told Reuters.

Zalando, on the other hand, was disappointed by the General Court’s verdict.

“Our highly curated business model does not present a ‘systemic risk’ of disseminating harmful or illegal content from third parties, as presumed for VLOPs,” the online retailer said in a statement.

Zalando said that it will appeal the General Court’s ruling.