Why Zalando does not want to be a ‘very large online platform’

Zalando does not want to be the biggest: the fashion webshop is disputing being named as a Very Large Online Platform (VLOP). Inclusion in the European Union’s list means having to adhere to the strictest digital rules.

Profiling restricted

The European Digital Services Act, which sets the ground rules for online players such as platforms and search engines, has been agreed since late April. The regulations aim to protect consumers online and prevent the distribution of illegal content, with the central principle being that what is not allowed offline should not be allowed online either.

In particular, handling of user data is more strictly regulated: for instance, the biggest platforms and search engines are no longer allowed to make recommendations based on profiling. In fact, targeting minors is completely prohibited from now on. Marketplaces are also required to be “careful” about what they offer (or have external sellers offer). Platforms like Amazon must therefore show more information about products and services, with the aim of improving transparency.

Complaint filed

The rules divide major platforms into two categories: those with more than 45 million monthly active users fall under the category Very Large Online Platforms and have to meet the highest criteria. This category includes giants like Amazon and Google, but also the likes of Zalando, Booking.com and AliExpress. Those that fail to meet that threshold are granted exemption from certain rules.

Zalando is now suing the European Court of Justice, against its designation as VLOP. The fashion marketplace believes there is no “clear and consistent methodology” to assess whether a specific company is a VLOP. Zalando also believes that the European Commission did not take into account its hybrid business model and that it does not pose a “systemic risk” of distributing harmful or illegal content, as is assumed for VLOPs.

The company also says it counts “only” 31 million monthly users among its partner programmes and ‘Connected Retail’: it believes that customers who (want to) buy directly from Zalando should not be counted. If that reasoning is followed, the German platform would therefore remain well below the 45 million mark.