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Zalando takes legal action against EU Commission over significant online content regulations.

Europe’s Biggest Online Fashion Retailer Zalando Sues European Commission

By Foo Yun Chee

BRUSSELS (Reuters) – Zalando, Europe’s largest online fashion retailer, has filed a lawsuit against the European Commission for categorizing it alongside tech giants Google and Meta Platforms under the new and stringent EU online content rules.

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Under the Digital Services Act (DSA) which came into force last year, Zalando was labeled as a very large online platform (VLOP) due to its massive user base of over 45 million.

In April, EU industry chief Thierry Breton identified 19 online platforms and search engines, including Zalando, as VLOPs. However, Zalando has contested this classification and has taken the matter to the Court of Justice of the European Union.

The company argues that the Commission failed to consider its unique hybrid business model and the fact that it does not pose a systemic risk of spreading harmful or illegal content from third parties.

Zalando CEO Robert Gentz stated, “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 believes that its retail business, which accounted for 64% of its gross merchandise volume last year, should not be subject to the DSA as it primarily focuses on retail services.

The company argues that the average monthly active users of its two programs, where brands, retailers, and brick-and-mortar stores directly sell to customers, falls below the DSA threshold of 45 million users.

Thierry Breton emphasized that the DSA aims to address the entry of illegal or unsafe products into the EU market, protect children from purchasing age-inappropriate or unsafe goods, and remove counterfeit merchandise from e-commerce platforms.

While the European Commission will defend its position in court, Zalando remains confident in its case and believes that the Commission’s approach is non-discriminatory and ensures a level playing field.

Violations of the DSA can result in fines of up to 6% of a company’s global turnover.

(Reporting by Foo Yun CheeEditing by Christina Fincher)

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