First pushback against EU's Digital Services Act and it's not Google
- Reference: 1687865346
- News link: https://www.theregister.co.uk/2023/06/27/zalando_vlop_lawsuit/
- Source link:
The EU first unveiled its hitlist of influential platforms on [1]26 April . As we explained [2]earlier that month , those companies are supposed to detail how their algorithms work, and be transparent about how their software allows ad slingers to target users or recommend content. The new rules are expected to apply from January 1, 2024.
Zalando, or as some Reg readers might know it – who? – is a €10.3 billion revenue company that operates in seven European countries and sells fashion retail online, inlcuding shoes, accessories and clothes. The company [3]this morning filed a legal challenge at the Court of Justice of the European Union (CJEU). The fashion retailer is contesting its designation as a "Very Large Online Platform" (VLOP) by the European Commission. Under article 33 of the Digital Services Act (DSA), VLOPs have extra obligations to manage systemic risks.
[4]
The Berlin-headquartered company said in a statement that the European Commission "did not take into account the majority retail nature" of its business model and argued that it "does not present a 'systemic risk' of disseminating harmful or illegal content from third parties."
[5]
[6]
It also accuses the EU of having irregular methodology on how it decides who is and who isn't a VLOP – if the point is to protect people, its inclusion is misguided, is the apparent argument.
The retailer 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 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".
Very Large Online Platforms :
Alibaba AliExpress
Amazon Store
Apple AppStore
Booking.com
Google Play
Google Maps
Google Shopping
Snapchat
TikTok
Wikipedia
YouTube
Zalando
Very Large Online Search Engines :
Bing
Google Search
The Commission has previously said it defines a VLOP as a company that reaches 45 million users or more, with Zalando saying on its [7]website that it serves over 50 million "active" customers.
Robert Gentz, Zalando's chief executive, told the [8]FT that the company was "puzzled" as to why it was designated as a very large online platform "alongside 18 other companies," adding: "We're the only European company on that list."
[9]
As for why Zalando wouldn't want to be a VLOP, the motivation is obvious. Being on the VLOP list places it under what the European Commission calls a "unique oversight structure." Under this framework, the Commission itself is the primary regulator for all very large online platforms and very large online search engines, "while other platforms and search engines will be under the supervision of Member States where they are established."
Although The Register can't speak to the veracity of these claims, some privacy and consumer activists we've spoken to have said the way the companies are dealt with by various member states can vary wildly.
[10]Amazon, Bing, Wikipedia make EU's list of 'Very Large' platforms
[11]Europe doesn't just pass laws on Big Tech algorithms, it sets up cop shops to police them
[12]Children should have separate sections in social media sites, says UK coroner
[13]EU tells Twitter 'you can run but you can't hide' from disinformation policy
Together with the DSA's "sister legislation", the Digital Markets Act (DMA), which takes aim at "core platform services" – including so-called cloud gatekeepers – the new laws are aimed at curbing the enormous power accumulated by the biggest, wealthiest and most influential companies in the world. Under the DMA, the companies face hefty fines or could even be told they need to offload assets or they can't operate within EU borders.
We have asked the Commission for comment. ®
Get our [14]Tech Resources
[1] https://www.theregister.com/2023/04/26/amazon_app_store_bookingcom_and/
[2] https://www.theregister.com/2023/04/20/europe_ecat_investigation/
[3] https://corporate.zalando.com/en/company/zalando-files-legal-action-against-european-commission-contest-its-designation-very-large
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZJsHnusgD62FgKj@g2K9mwAAAkY&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZJsHnusgD62FgKj@g2K9mwAAAkY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZJsHnusgD62FgKj@g2K9mwAAAkY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://corporate.zalando.com/en/about-us/zalando-logistics
[8] https://www.ft.com/content/82eb9efe-097c-463d-a833-4d9497bcd50e
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZJsHnusgD62FgKj@g2K9mwAAAkY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://www.theregister.com/2023/04/26/amazon_app_store_bookingcom_and/
[11] https://www.theregister.com/2023/04/20/europe_ecat_investigation/
[12] https://www.theregister.com/2022/10/18/social_media_separate/
[13] https://www.theregister.com/2023/05/30/twitter_disinformation/
[14] https://whitepapers.theregister.com/
I only know it because my neighbour is responsible for most of those €10billion of sales...
Does my wife live next door to you then?
Who!?
No, really... Who?
Re: Who!?
It's one of the few online traders that is profitable.
Re: Who!?
They are indeed very big in Central Europe as the 10 billion+ revenue figure might have indicated.
They basically have taken Netflix's old DVD business model to fashion.... you order the clothes / shoes you want to try, keep the ones you like and send back (for free) the ones that don't fit / you don't like. The shipping costs more than offset the cost of having a high-street store (and transport / energy costs be damned*), and the volume allows them a much lower margin (and pricing) than high street stores.
*Although to be fair maybe the heating / lighting costs of 10000 physical stores + the travel costs of customers to the stores + the shipping to all the stores are, in fact, higher than shipping all the clothes between a central warehouse and the end client
who is and who isn't a VLOP
Very surprised not to see FleaBay on the list.
Re: who is and who isn't a VLOP
It seems they've got 135 million users worldwide, so it sounds reasonable that they don't reach the threshold for the EU.
Re: who is and who isn't a VLOP
Also chat apps like WhatsApp, Telegram, iMessages.
Or platforms like Netflix and Spotify.
These surely have >45m users in EU
In that Zalando's algorithm is intended to sell cheaply-made clothing to people who don't need any more of it, and didn't want it until the algorithm thrust it at them, Go, Go EU!
But, not knowing who Who is and not wishing to know who Who is, do they advertise or push third party content within their site or sell marketing data out of their site?
If they only sell their own product and data is used internally to the site that could be construed as simply being an online-catalogue with appropriate marketing and self-promotion.
However if they sell third party advertising and content or have hidden data collection/selling regimes that would be a different kettle of Zuck and leaves any large seller open to individual state control ...
If the EU haven't well defined who will be directly impacted by this ruling I would suggest its lawyers and policy makers should be sacked for getting it wrong, or perhaps congratulated by big business on their creation of a "hard hitting public friendly policy" with effective escape routes and avoidance procedures for those who want to ...
I definitely know them, have bought for them a few times. Last was a pair of leather shoes, for about 100€. A good brand, that I've come to like years ago from a brick & mortar shop. No algorithm suggestion involved in that case, they just happened to have what I wanted available for sale :)
Is it a VLOP??
"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""
...and...
"The Commission has previously said it defines a VLOP as a company that reaches 45 million users or more, with Zalando saying on its website that it serves over 50 million "active" customers."
Seems like the Commission does indeed have a "clear and consistent methodology", and Zalando are by their own admission/boast falling squarely into that category.
" the European Commission "did not take into account the majority retail nature" of its business model and argued that it "does not present a 'systemic risk' of disseminating harmful or illegal content from third parties.""
If that is indeed the case, surely they can easily demonstrate that they don't spread misinformattion etc, and being regulated directly by the EU rather than by Germany will make no difference
Re: Is it a VLOP??
Amend their definition of "active" to take it below 45 million. Job done.
Congratulations, you've been selected as the token EU platform to make the list only slightly less American and Chinese dominated.. /s
Zalando, or as some Reg readers might know it – who? That really tickled me as you know your readers so well. Have a virtual beer!