Zalando fights EU’s classification as a VLOP

Because there are expensive obligations associated with its classification, Zalando has filed a complaint with the Court of Justice of the European Union (ECJ) against its classification as a “very large online platform” (VLOP) by the European Commission under Article 33 of the Digital Services Act (DSA) because it has more than 45 million users.

The German online fashion retailer argued that the European Commission had not taken 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.” This is more the case with social media, which Zalando is not, the company said. “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 contested the unequal treatment resulting from the absence of a clear and consistent methodology” to assess whether a company is a VLOP, it added. Zalando also accused the EU Commission of an erroneous, even unfair, method of assessment. Because the authority had not provided the platforms in question with a “clear and coherent methodology” for calculating user numbers, all platforms had provided their figures at their own discretion and in a non-transparent way. Other companies had reported only registered users, for example, others had decided not to provide any precise figures at all. Zalando reported its visitor numbers: “This definition is broader and includes duplicates, for example.”

The retail platform was founded in 2008, and by 2022 had already reached sales of €10.3 billion and is active in 25 European markets. The company said the number of active shoppers rose to more than 51 million in 2022, securing the e-tailer the top spot in Europe.

The European Commission is the regulator enforcing the requirements for VLOPs, which will be subject to stricter rules from August 25. In mid-November 2022, the Digital Services Act came into force, an EU regulation aimed at making digital services better and safer through regulation – at least within the EU Commission’s sphere of influence. In April, the Commission announced the 19 VLOPs selected under the DSA. In addition to Zalando, the list includes Amazon, Alibaba, Facebook, Instagram, Google Maps, Twitter, TikTok and Wikipedia. The classification requires companies to manage systemic risks, which leads them to invest in specialized staff and technologies.