Presumption of exposure to third-party content for the classification as a major online platform

On 25 April 2023, the European Commission designated Zalando as a very large online platform (VGPO) pursuant to Article 33 of the Digital Services Act (DSA, Regulation (EU) 2022/2065). This designation is based on exceeding the threshold of 45 million average monthly active users in the European Union, estimated at over 83 million for Zalando, a platform specialising in fashion and beauty. This designation imposes enhanced obligations, particularly regarding consumer protection and the fight against illegal content, such as the appointment of a digital coordinator and independent audits. Zalando has challenged this measure before the General Court of the European Union, arguing that its business does not fully meet the definition of an ‘online platform’ and that the calculation of active users overestimates actual exposure to third-party content.
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Legal framework of the DSA and classification of very large online platforms

The scope of the DSA and the definition of online platforms

The Digital Services Act (DSA, Regulation (EU) 2022/2065) distinguishes between intermediary services and online platforms, the latter storing and disseminating information provided by third parties to the public. Very large online platforms, subject to a stricter regime, are defined based on a quantitative threshold: 45 million average monthly active recipients in the EU. This criterion includes authenticated users, occasional visitors, and businesses, but requires actual exposure to third-party content. The Court clarifies that only intermediation qualifies as a platform, excluding direct commerce activities where the operator sells its own products.

The Specific Obligations of Very Large Online Platforms and Their Regulatory Justification

The classification as a very large online platform entails increased obligations: appointment of a digital coordinator, independent audits, systemic risk assessment, and measures against illegal or harmful content (Articles 34 to 44 of the DSA). This preventative approach aims to protect consumers and competition from the network effects of digital giants. The Court validates this logic by emphasizing proportionality: the quantitative threshold simplifies identification but must be assessed in light of actual exposure to third parties to avoid over-regulation of hybrid players.

Zalando’s Classification as a Very Large Online Platform and Implications for Hybrid Platforms

The Functional Distinction Between Intermediation and Direct Commerce

The Court rejects Zalando’s argument by making a clear distinction: Zalando is an online platform for third-party sellers’ offers, but not for its own sales, where it acts as a direct merchant without intermediation. Only recipients exposed to third-party information count towards the very large online platform threshold. This approach is inspired by the Google Shopping case law of November 10, 2021 (T-612/17), which prioritizes a functional assessment over a global view of the activity. It mandates a segmented analysis of services, aligned with Article 56 of the General Court’s ruling on the functioning of the European Union and the freedom to conduct a business.

The presumption of exposure to third-party content and the burden of proof

Given Zalando’s inability to precisely quantify the number of users exposed among its 83 million, the Court accepts a presumption that all users are deemed exposed, given the indiscriminate integration of third-party and own products. This presumption, justified by the preventive objective of the DSA and the lack of reliable data, partially reverses the burden of proof on the contesting platform. It facilitates the uniform application of the regulation but calls for future technical guidelines from the Commission to objectify the calculations.

This ruling constitutes a major first contentious interpretation of the DSA, affirming its ambition to regulate the digital space by establishing the presumption that all users of the platform are deemed to have been exposed to information from third-party sellers.