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Under the Digital Services Act (DSA) which came into force last
year, Zalando was labelled a very large online platform (VLOP)
because it has more than 45 million users.
EU industry chief Thierry Breton in April labelled 19 online
platforms and search engines as VLOPs, including five Alphabet
subsidiaries, two Meta units, two Microsoft businesses, Twitter,
Alibaba's AliExpress and Zalando.
Germany's Zalando contested the labelling methodology and took
its case to the Luxembourg-based Court of Justice of the
European Union, Europe's top court.
The company said the Commission had failed to take into account
the hybrid nature of its business model and the fact it does not
present a systemic risk of disseminating harmful or illegal
content from third parties.
"The European Commission misinterpreted our user numbers and
failed to acknowledge our mainly retail business model. The
number of European visitors who connect with our Partners is far
below the DSA's threshold to be considered as a VLOP," Zalando
CEO Robert Gentz said in a statement.
Zalando said users of its retail business, which accounted for
64% of its gross merchandise volume last year, should not be
counted as the DSA doesn't apply to retail services.
It said the 31 million average monthly active users of two
programmes where brands, retailers and brick-and-mortar stores
sell directly to its customers falls below the DSA threshold of
45 million users.
Breton said the DSA also tackles the entry of illegal or unsafe
products into the EU market, protects children against buying
age inappropriate or unsafe goods and removes counterfeit
merchandise from e-commerce platforms.
"Complying with the DSA is not a punishment – I encourage all
platforms to see it as an opportunity to reinforce their brand
value and reputation as a trustworthy site," he said in a
statement.
The Commission will defend its position in court, said an EU
official
"I am confident in our methodology and the fact that our
approach is non-discriminatory and ensures a level playing field
across the board," the official said.
DSA violations can cost companies a fine of up to 6% of their
global turnover.
(Reporting by Foo Yun CheeEditing by Christina Fincher)
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