Zalando must comply with stricter rules for online services

The EU wants to protect people from illegal content on internet platforms like Facebook and YouTube. Following a ruling, fashion retailer Zalando will also be subject to strict regulations.

According to a ruling by the Court of Justice of the European Union, the EU classification of the online shop Zalando as a “very large online platform” and the associated stricter rules for the company are lawful. The court dismissed an action brought by the Berlin Dax-listed group against the corresponding decision of the European Commission under the Digital Services Act (DSA), as the judges in Luxembourg announced.

Threshold

The commission was therefore entitled to assume that Zalando exceeded the relevant threshold of 45 million active users for such a classification.The company announced that it would appeal the decision before the Court of Justice of the European Union.

The DSA is intended to ensure, among other things, that platforms quickly remove illegal third-party content from their sites. The European Commission classified Zalando as a so-called very large online platform within the meaning of the DSA in April 2023, assuming 83 million active users per month in the EU. Particularly strict requirements apply to very large platforms and search engines. They must, for example, submit annual risk assessments and share data with authorities and researchers.

Zalando’s hybrid business model

The company argued against this, stating that, on the one hand, it is not a classic platform because it provides its own content and, moreover, practically appropriates the products of third parties after careful examination. In addition, the user figures had been misinterpreted. Zalando’s business model is hybrid: although it sells its own products, and also sells the products of third parties as part of a partner programme.

The Court of Justice of the European Union ruled that Zalando is a platform under the DSA with regard to third-party sales. Zalando was unable to distinguish who among the more than 83 million people who used the entire shop were exposed to content from the partner programme. Therefore, all users were to be counted together.

After the ruling was announced, the company stated: "We continue to believe that the court did not adequately consider that Zalando exclusively offers curated, high-quality products from established and trustworthy brand partners. Due to this vetted selection, the business model does not pose a "systemic risk" for the dissemination of harmful or illegal content from third parties."

This article was translated to English using an AI tool.

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