Zalando v Commission: EU’s General Court dismisses Zalando’s challenge to VLOP designation and affirms DSA’s use of AMAR

On 3 September, the General Court of the European Union (the General Court) delivered a significant judgment in Case T‑348/23, dismissing Zalando SE (Zalando)'s challenge to the European Commission's decision to designate the Zalando website as a “very large online platform” (VLOP) under the Regulation (EU) 2022/2065 (the Digital Services Act or DSA). This is the first decision in a number of challenges that providers have brought to the designation of their platforms as VLOPs. Amazon, Technius (the provider of Stripchat), and Aylo Freesites (the provider of Pornhub) have also challenged their VLOP designations.

Summary

The General Court in the Zalando decision confirms that:

• Where a service displays the provider’s own information alongside third-party information stored and disseminated on that service, the European Commission (the Commission) is entitled to assume that all recipients of the service are exposed to third-party information (unless the provider can demonstrate otherwise)
• It is the responsibility of providers to choose a reliable method for calculating their average monthly number of active recipients (AMAR) that is likely to comply with the DSA and which does not underestimate their AMAR
• The use of AMAR as the criterion to determine whether a service should be designated as a VLOP is a more effective way of achieving the aims of the DSA, when compared to the use of other qualitative criteria (which would significantly delay the designation process and therefore the imposition of DSA obligations) 
• AMAR is a proportionate means of assessing whether a marketplace potentially poses systemic risks in the EU, as it is indicative of the proportion of the EU population that could be exposed to dangerous or illegal products marketed on the platform

Zalando has confirmed its intention to appeal the matter to the Court of Justice.

Background to the dispute

On 25 April 2023, the Commission designated the Zalando website, an online shop selling fashion and beauty products, as a VLOP. This designation was based on the Commission's determination that the Zalando platform's AMAR in the EU exceeded the threshold of 45 million, reaching over 83 million active recipients.

Designation as a VLOP means that Zalando is subject to additional significant obligations to manage systemic risks on its platform, including the conduct of annual systemic risk assessments and external independent audits to assess compliance with its DSA obligations.

The Zalando platform comprises both products which are sold directly by Zalando (Zalando Retail), and products which are sold by third-party sellers on the Zalando website who participate in Zalando’s partner programme (the Partner Programme). It was common case that Zalando Retail was not a hosting service/online platform within the meaning of the DSA, as it did entail the storage of information provided by a recipient of the Zalando service.

Decision

Modifying content as an intermediary service

For intermediary services to avoid liability for third-party content that is transmitted through, temporarily stored on, or hosted on, its service, it is important that the provider does not play an active role in the processing of the information, such that it has knowledge or control over the information provided by the third parties. Indeed, when interpreting Directive 2000/31/EC (the eCommerce Directive), the Court of Justice had previously held that where a service provider assumes an active role, it cannot be considered to be providing an intermediary service.[1]     

On this basis, Zalando argued that the Partner Programme should not be considered an intermediary service as Zalando modifies and supplements information (product descriptions and images) provided by third-party sellers participating in the Partner Programme, before that information is displayed on the Zalando website. As VLOPs are a type of intermediary service under the DSA, if the Zalando website was not an intermediary service, it could not be a VLOP.

 The General Court rejected that argument, and clarified that:

• Relying on Recital 41 of the DSA, the DSA’s liability exemption provisions are independent from, and cannot be used to determine whether a provider must comply with, the DSA’s due diligence obligations, including the additional obligations imposed on VLOPs. In essence, there is nothing inconsistent in suggesting that a service could be an intermediary service for the purposes of the DSA, but lose the liability exemptions potentially available to it because of the knowledge and control it had over third-party information on the service. 
• The Court of Justice’s jurisprudence on liability exemptions under the eCommerce Directive, including its rulings in relation to the characteristics of an "intermediary service provider”, is not applicable to determining whether a service is an intermediary service under the DSA, as the DSA provides its own definition of "intermediary service” at Article 3(g) of the DSA.

Establishing the AMAR for recipients exposed to information on the service

As noted above, in order to be designated a VLOP pursuant to Article 33 of the DSA, the Commission has to be satisfied that the service has over 45 million AMAR. While Zalando estimated it had 83 million AMAR in total, it estimated that only c.31 million AMAR was attributable to Partner Programme content (calculated by reference to the value of third-party products sold on the platform through the Partner Programme). Accordingly, it argued that it should not be designated as a VLOP as the element of the service on which recipients were exposed to third-party content did not reach the 45 million AMAR threshold.

The General Court rejected this argument on the basis that Zalanado was not entitled to determine the number of recipients exposed to third-party information by reference to the value of third-party products sold on the Zalando website. The relevant AMAR had to be calculated by reference to the number of users exposed to the third-party information by visiting the website, irrespective of whether they completed a transaction on the Zalando platform. This interpretation is supported by Recital 77 of the DSA, which indicates that engagement is not limited to interacting with information through clicking on, commenting, linking, sharing, purchasing or carrying out transactions on an online platform.

The Court held that Commission was entitled to consider that all users who visit the Zalando website are exposed to third-party information in circumstances in which:

• Zalando Retail information and Partner Programme information was displayed together, without a user being able to distinguish third-party content unless they clicked on a product
• Zalando was not in a position to confirm how many people had actually been exposed to third-party information

Legal certainty and the General Court’s guidance on AMAR counting

The EU principle of legal certainty requires that rules be clear and precise (but not that rules should remove all doubt as to their interpretation). In essence, Zalando relied upon the ambiguity as to how AMAR should be calculated pursuant to Article 24(2) of the DSA to argue that the VLOP designation process lacked legal certainty.

This prompted the General Court to make observations about AMAR that will be closely considered by other VLOPs and large non-VLOPs. In particular, the General Court noted:

• providers may have to count bots if they are not able to exclude them without processing personal data or tracking
• providers may have to count the same recipient several times, unless they have a reliable method to only count them once
• it would be an infringement of the DSA to exclude a recipient from the AMAR count because they:
  • were not registered with the platform
  • only viewed the provider’s own content on the platform, where that platform displays both the provider’s content and third-party content on the same interface
  • did not enter into a transaction on the platform
  • were inactive on the platform for a certain period of time
  • have refused to use cookies on the platform
  • have accessed the platform from an application
  • are in a Member State where the provider is not active or in which its products cannot be delivered, notwithstanding that they are in the EU

Ultimately the General Court concluded that while Article 24(2) of the DSA gives providers flexibility to determine their AMAR having regard to the particular nature of the service and how users interact with it, this did not mean the provision lacked legal certainty. Rather, as things stand, Article 24(2) of the DSA leaves the provider with the  responsibility to choose a reliable method for calculating AMAR that was likely in compliance and which did not underestimate AMAR.

Notably, the General Court specifically rejected the argument that the Commission’s failure to adopt a delegated act rendered the AMAR obligations legally uncertain, notwithstanding that such a delegated act was specifically contemplated by the EU legislature. Furthermore, the fact that other EU legislation (Regulation (EU) 2022/1925 - the DMA) has provided more detailed guidance on the calculation of the related concept of “active end users” was not considered by the General Court to be relevant to whether Article 24(2) of the DSA breached the principle of legal certainty.

Does the VLOP designation process breach the principle of equal treatment?

Zalando also argued that the VLOP designation process should be invalidated on the basis that it breached the EU principle of equal treatment. That principle prohibits treating comparable situations differently, or treating different situations the same way, where such treatment is arbitrary or manifestly inappropriate having regard to the objectives being pursued.

The General Court rejected the various arguments raised by Zalando in this respect, holding:

• Zalando had failed to demonstrate that a comparable platform had not been designated as a VLOP due to the alleged ambiguity around how platforms calculate their AMAR
• Marketplaces also give rise to systemic risks, including the marketing of dangerous and illegal products, to a significant proportion of the EU’s population. Accordingly, the EU legislature had not made a manifest error in subjecting VLOP marketplaces to the same types of heightened obligations applicable to social networking platforms
• If the Commission had to use qualitative criteria other than AMAR to designate VLOPs, the designation process would have been longer, requiring a case-by-case analysis of each potentially in-scope platform, thus delaying the implementation of the DSA. As such, the AMAR criterion allowed the objectives to the DSA to be achieved more effectively, and was not a manifestly inadequate criterion

Does the VLOP designation process breach the principle of proportionality?

It was also argued that the VLOP designation process infringed the principle that acts of EU institutions should be limited to what is appropriate and necessary to achieve legitimate objectives. This proportionality principle is breached where the particular act is manifestly inappropriate.

In this regard, Zalando had argued that AMAR is not an appropriate criterion for identifying dangerous platforms. However, in circumstances in which the marketplaces can be used to market dangerous and/or illegal products to a significant proportion of the EU’s population, the General Court held the AMAR criterion was not manifestly inappropriate.

The General Court also rejected the argument that it was disproportionate to factor-in recipients of the service which were not exposed to third-party content on the platform. In this respect, the General Court reiterated that it was open to Zalando to assess its AMAR by reference to only those who had been exposed to third-party content, if there was a reliable way of doing so.

Sufficiently detailed reasons

The General Court also rejected Zalando’s arguments that the Commission’s designation decision did not give adequate reasons as to why the Zalando website was an online platform, and why recipients of the service who had bought Zalando Retail products should be included in the AMAR count.

In response, the General Court noted that the Commission’s decision recorded that Zalando itself appeared to acknowledge that it considered at least the Partner Programme to be an online platform. Furthermore, the Commission’s decision explained that recipients of the service who purchased products from Zalando Retail may have also been exposed to information from third parties on the platform, and therefore could be included in the AMAR count.

Analysis

While the Zalando judgment touches on a wide-range of issues associated with the VLOP designation process, the significance of the judgment is its vindication of the AMAR concept. The concept of AMAR is very significant in the DSA. As noted, it is the basis upon which VLOPs are designated, and it also plays an important role in determining the supervisory fee that can be applied by the Commission to VLOPs. Furthermore, national Digital Service Coordinators also rely on the concept (e.g. Coimisiún na Meán uses the concept for determining a number of its levies). Yet the concept is controversial because, due to the Commission’s failure to adopt any delegated act as to how AMAR is to be calculated, different providers take different approaches to calculating their AMAR, meaning comparing different providers’ AMARs is not necessarily comparing like for like.

The Zalando judgment decisively affirms the use of AMAR and dismisses criticisms related to different providers using different methods. Notably, the General Court suggests that a number of Zalando’s criticisms around how other providers are calculating their AMAR do not suggest shortcomings in the DSA, but rather shortcomings in how those providers are complying with the DSA.

Further, while providers have pressed for the Commission to formulate a delegated act on the calculation of AMAR, the Zalando judgment arguably takes pressure off the Commission to do so. In confirming that the lack of a delegated act cannot be used to impugn the use of AMAR for designating VLOPs, the impetus to design a complicated delegated act which can accommodate a wide variety of platforms which operate in a  wide variety of ways has arguably lessened. In addition, the General Court appears to signal that the Commission’s use of AMAR figures from third-party sources to calculate its supervisory fee is not necessarily impermissible. That issue will be addressed more directly when the General Court decides T-55/24 Meta Platforms Ireland v The Commission on 10 September 2025; however, if the General Court accepts that the Commission can use third-party AMARs, this further lessens the impetus for the Commission to adopt a delegated act on the issue.

For further information, please contact Dr Stephen King, Partner, or Sean Dwyer, Solicitor or your usual ALG Technology contact.

Date published: 9 September 2025

[1] See L’Oréal SA & Others v eBay International AG & Others, C‑324/09 at [112] and [113].