Amazon Challenges EU’s Digital Services Act, Claims It Isn’t a Large Online Platform
Amazon is pushing back against the European Union’s new Digital Services Act (DSA) by arguing that it does not meet the criteria to be classified as a Very Large Online Platform (VLOP). The company has filed an appeal with the EU General Court, challenging the European Commission’s decision that Amazon falls under the VLOP category and therefore must comply with the new regulations.
While Amazon agrees with the objective of the DSA to protect consumers from illegal products and content, it disputes the characterization of being a VLOP under the law. The DSA includes requirements for content moderation, transparency rules, and protections for minors, such as banning targeted advertising based on profiling children.
Amazon contends that the DSA specifically targets very large companies with advertising as their primary revenue. As a primarily retail-based business, Amazon argues that its vast majority of revenue comes from its retail operations and not advertising. Therefore, it should not be subjected to the same regulatory obligations as platforms with advertising as their primary revenue stream.
Additionally, Amazon claims that it is being unfairly singled out as one of the 19 platforms bound by the DSA. The company pointed out that it is not the largest retailer in any of the EU countries where it operates, while some retailers with larger businesses in individual countries were not included in the list of companies required to comply with the DSA.
Platforms must have over 45 million active users in the EU to fall under the DSA’s regulations. Amazon argues that it is unjust that other large retailers, such as Poland’s Allegro and the Dutch Bol.com, were not designated as VLOPs despite not meeting the user threshold.
In response to Amazon’s appeal, the European Commission stated that it would defend its position in court and emphasized that Amazon must comply with the rules by the end of August, regardless of the outcome of the appeal. The commission believes that the DSA applies to all platforms that expose users to content, including the sale of products or services that could be illegal. The commission argues that the wide user reach of these platforms increases the risks and responsibilities they must address.
The DSA primarily affects US-based companies, with 19 large online platforms designated for compliance. These include Google, Facebook, Meta-owned platforms like Instagram, and Amazon. Platforms have until August 25 to comply with the DSA’s requirements or face potential fines of up to 6% of their annual revenue.
The DSA aims to mitigate risks related to illegal content, disinformation, freedom of expression, and media freedom. It requires platforms to assess and address various risks, including gender-based violence online, the protection of minors, and the impact on mental health. Under the DSA, platforms must provide clear information on why certain information is recommended, offer opt-out options for recommendation systems based on profiling, and establish efficient mechanisms for users to report illegal content.
Amazon’s appeal is seeking a complete removal of its VLOP designation. However, the company has proposed two alternative options if the court does not fully side with Amazon. These alternatives involve removing the obligation to provide profiling-based recommendation options and eliminating the need for an advertisement repository.
The outcome of Amazon’s appeal will have significant implications for the implementation and enforcement of the DSA within the EU. It highlights the ongoing challenges faced by regulators in defining and regulating large online platforms, particularly when their revenue streams and business models vary significantly.
