EU’s Largest Fashion Retailer Sues EU Commission Over Content Rules

Zalando, the largest online fashion retailer in Europe, has filed a legal challenge against the European Commission. The company is disputing its classification alongside Google and Meta Platforms under new EU content rules.

Zalando was categorized as a very large online platform (VLOP) under the Digital Services Act (DSA) due to its user base exceeding 45 million.

In April, EU industry chief Thierry Breton identified 19 online platforms and search engines, which he referred to as VLOPs. This group included five subsidiaries of Alphabet, two units of Meta, two Microsoft businesses, Twitter, Alibaba’s AliExpress, and Zalando.

Zalando, a company based in Germany, has challenged the labelling methodology and has brought the matter to the Court of Justice of the European Union in Luxembourg, which is the highest court in Europe.

The company stated that the Commission did not consider its hybrid business model and the absence of a risk in spreading harmful or illegal content from third parties.

Related: EU Watchdog Probes Fashion Firms’ Pricing Practices

“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 stated that its retail business, which made up 64% of its gross merchandise volume in the previous year, should not be classified under the DSA as it is not applicable to retail services.

The monthly active user count of two programs that allow direct sales to customers by brands, retailers, and physical stores is reported to be 31 million, which is below the DSA threshold of 45 million users.

According to Breton, the DSA addresses the issue of illegal or unsafe products entering the EU market, safeguards children from purchasing inappropriate or unsafe goods, and eliminates counterfeit items 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.