Out-Law News 1 min. read

Zalando lodges Digital Services Act legal challenge

Zalando SEO

iStock.com/David Peperkamp

Berlin-based online fashion retailer Zalando has lodged a legal challenge against its designation as a ‘very large online platform’ (VLOP) under the EU Digital Services Act (DSA).

The company was one of 19 businesses designated by the European Commission as a VLOP back in April, with new rules specific to VLOPs set to take effect from 25 August this year.

However, on Tuesday, Zalando said it had filed a legal challenge at the Court of Justice of the European Union (CJEU) contesting its designation as a VLOP. Among other things, it criticised the basis on which businesses are assessed as whether they qualify as VLOPs for the purposes of the DSA. Zalando chief executive Robert Gentz told the Financial Times that the company had been “designated on the basis of visitors” while the other businesses designated as VLOPs had been “designated on the basis of users”. He described that as “unequal treatment”.

In a statement, Zalando said: “Zalando argues that the European Commission did not take into account the majority retail nature of its business model and that it does not present a ‘systemic risk’ of disseminating harmful or illegal content from third parties. On the contrary, Zalando offers its customers a safe online environment with highly curated products from leading brands and established partners that are thoroughly vetted.”

“The company also contests the unequal treatment resulting from the absence of a clear and consistent methodology to assess whether a company is a ‘Very Large Online Platform’,” it said.

The DSA was finalised by EU law makers last year. It builds on existing provisions of EU law under the E-Commerce Directive, which governs what online intermediaries need to do currently when they become aware of the existence of illegal activity on their services.

When it begins to take effect, a new tiered system of regulation will apply, with obligations of varying stringency depending on the nature and size of the ‘intermediary services’ provided. The strictest requirements apply to VLOPs and ‘very large online search engines’ (VLOSEs) and include an obligation to identify, and then address, systemic risks associated with their services.

Pinsent Masons has published a guide to help businesses understand the extent to which their services may be regulated under the DSA.

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