European Commission dismisses Zalando’s VLOP appeal under the Digital Services Act

The question

How has the European Commission (Commission) responded to Zalando’s appeal regarding its designation under the Digital Services Act (DSA), and what does this mean for online platforms in the EU?

The key takeaway

The Commission has taken a robust stance on digital regulation. Online platforms with average monthly recipients approaching 45 million should consider aligning their processes with the “very large online platform” requirements of the DSA, easing future compliance if so designated.

The background

The DSA, which came into force in November 2022, places obligations on providers of online intermediary services to keep users safe from illegal goods, content or services, and to protect their fundamental rights online. Different obligations apply to entities depending on their size and the services they provide. The two groups of companies that receive the highest level of scrutiny under the DSA are “very large online platforms” (VLOPs) and “very large online search engines” (VLOSEs). See our Winter 2024 edition for more information on the DSA.

Zalando is one of Europe’s largest e-commerce platforms with over 83 million average monthly recipients. It sells directly to consumers through the “Zalando Retail” service and consumers can also purchase products from third-party sellers who participate in Zalando’s “Partner Programme”. In April 2023, the Commission designated the Zalando platform as a VLOP on the basis that its average number of active recipients exceeded the VLOP threshold of 45 million under the DSA. The Commission considered that the number of active recipients of an online platform includes all recipients using the platform, in particular by being exposed to information disseminated on it, and that it was not limited to those who carried out transactions on it. Given the products marketed by Zalando were displayed alongside those marketed by third-party sellers, with no possibility of distinguishing between the two on the interface, the users who were exposed to information relating to Zalando’s products and those users exposed to information relating to the products of third-party sellers should count towards the active monthly recipients figure for the purposes of determining whether the VLOP threshold was exceeded.

The development

Zalando appealed Commission’s April 2023 decision, arguing that only users exposed to its third-party sellers should count towards the threshold, lowering the average to 31 million. Unable to identify which users within the 83 million were exposed to information relating to the products of third-party sellers, the General Court of the European Union (GCEU) assessed the users altogether and the designation appeal was rejected. Zalando also claimed the VLOP classification rules breach principles of legal certainty, equal treatment and proportionality. The GCEU rejected this, highlighting that VLOPs’ risk facilitating the marketing of dangerous or illegal products to significant proportions of the EU population.

This decision continues the Commission’s active enforcement of DSA provisions and signals its reluctance to leave consumer protection in the hands of online platforms. For e-commerce platforms like Zalando, it highlights the significant role they play in the digital ecosystem – particularly as an unintended threat. Whilst the Commission acknowledged that Zalando, and other online marketplaces, carefully select the sellers operating on their platforms, it remains compelled to ensure their performance of additional regulatory obligations.

Key points from the Commission’s decision include:

• confirmation that the DSA applies broadly to platforms facilitating third-party sales
• reiteration of the importance of risk mitigation measures
• confirmation that even robust third-party selection and content curation is insufficient protection, and
• a clear indication that the Commission will continue to monitor compliance and take enforcement action where necessary.

Why is this important?

For platforms with monthly recipients above or near to the 45 million threshold, this decision makes it clear that VLOP obligations cannot be avoided by hiding behind third party sellers, particularly where the platform is unable to distinguish between the users that had been exposed to information from third party sellers and those who had not. Businesses operating online in the EU must assess their exposure to DSA requirements and prepare for increased scrutiny.

The decision also sets the Commission’s tone towards platforms seeking to challenge DSA designations. Evidently, the Commission will not easily bend to factual, legal or policy submissions brought against its crackdown on inadequate consumer protection.

Any practical tips?

Business who may be subject to VLOP designation should consider the following:

• assess whether your platform meets the DSA’s VLOP criteria and review user numbers regularly
• conduct comprehensive risk assessments and implement robust systems for detecting illegal content and products
• ensure transparency in advertising, recommender systems, and user interactions
• establish clear complaints and redress mechanisms for users and third parties
• monitor regulatory developments and engage with legal counsel to ensure ongoing compliance.

Autumn 2025