Online retailer Zalando bound by strictest EU platform rules: court

German fashion website Zalando is bound by the strictest online platform rules, the EU’s general court said in a judgment on Wednesday. 

Zalando is the first online platform to challenge its designation under the EU’s platform rules, the Digital Services Act (DSA), claiming that its user numbers are a lot lower than was estimated by the European Commission upon its designation.

The legislation, meant to combat illegal content online, started applying in August 2023 to the bloc's biggest online platforms – those with more than 45 million users per month.

The court said that since Zalando could not distinguish, among the more than 83 million people who used its platform, those who were actually exposed to the information provided by third-party sellers from those who were not, the "European Commission could consider that they were all deemed to have been exposed to it."

"The Commission could therefore consider that the average monthly number of active recipients of the Zalando platform amounted to more than 83 million, and not only around 30 million as Zalando claimed on the basis of the gross value of sales generated under the Partner Programme," the court said.

The landmark ruling is a blow to other platforms with similar business models, as well as others which have appealed their designation including e-commerce player Amazon, and porn websites Pornhub, Stripchat and Xvideos. 

A Zalando spokesperson told Euronews that the company will appeal the judgement.

"We are disappointed by today's decision (... ) the judgement maintains the uncertainty about user counts (“active recipients of a service”), as the current absence of a common methodology leads to an incoherent, uneven application of the law," the statement said.

In June the court heard a second challenge to the Commission’s DSA policy brought by Amazon. A ruling in this case is expected at a later stage.

User numbers

In August 2023, the Commission designated the first batch of 19 platforms – including Facebook, Instagram, TikTok, LinkedIn, Amazon and Zalando – that are considered a Very Large Online Platform (VLOPs). The Commission has since designated six other platforms that pass the threshold of 45 million active users per month.

Those VLOPs face stricter rules than other platforms with lower user numbers including supervisory fees and more transparency reporting obligations.

Zalando challenged that decision, claiming that it differed from the others VLOPs. The platform, founded in 2008 in Berlin, said the Commission's methodology for counting user numbers and assessing whether a company is a VLOP lacked clarity and consistency.

In addition, in its defence, Zalando claimed that it operates a “hybrid business model” with a retail business and a partner business. It claims its retail business, which represents 61% of its business, for which Zalando’s provides its own content, does not fall within the scope of the DSA.

The Commission said in its designation decision that it's impossible to know whether a particular recipient of Zalando is “exposed to products stemming from Zalando SE’s proprietary retail business or from third-party traders using its intermediation service, as both types of products are indistinctly displayed on Zalando’s online interface.”

The story has been updated with a Zalando statement.