German E-Retailer Launches Legal Fight Against Big Tech Classification

Photo credit: Mika Baumeister/Unsplash

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No one wants to be tarred with the Zuck brush.

Zalando, a German fashion e-retailer, is taking the EU to court after it was classified as a “very large online platform” for the purposes of the bloc’s upcoming Digital Services Act (DSA). Zalando doesn’t want to be lumped in with the dastardly likes of Amazon, Google, Meta, and Apple and — most importantly — it doesn’t want to be regulated like them.

Ich bin kein Big Tech

Regulators love to say they’re “reining in Big Tech,”— but what does that term actually mean? Culturally, Big Tech has been shorthand for a handful of unfathomably rich US companies with nebulous but overlapping business models. Common symptoms include algorithms, data collection, and congressional hearings. But a simple list of those companies hardly comprises a future-proof legislative framework, plus it can raise hackles from the US government over unfair persecution of its wildly successful tech firms.

The DSA, which will come into force in August, will regulate huge swaths of the online world: from disinformation to consumer rights, to algorithmic transparency. It will apply most stringently to companies that qualify as “very large online platforms,” which it defines as any platform with more than 45 million monthly visitors — much to Zalando’s dismay:

  • Zalando is arguing that the EU shouldn’t be looking at visitors to its site, which number around 83 million per month, but rather the number who actually buy things from third-party vendors on the site, which is closer to 31 million. To put those numbers in context, Amazon said in March 2022 it had “over 300 million active customer accounts.”
  • On top of being subject to Big Tech’s rules, CEO Robert Gentz told the Financial Times it’s just plain embarrassing to be lumped in with Silicon Valley behemoths. “These companies are talked about as bad actors and all of a sudden we are on the same list. This is bad for our brand,” Gentz said.

Zalando’s case has the potential put some chinks in DSA’s armor as it battles actually Big Tech. Any precedent that it sets about exactly what makes e-retail different from Big Tech could turn into a handy wedge for them to wield in the future.

Où est la bibliothèque? While Zalando takes on the EU, Amazon is fighting France over a piece of legislation from 2021 that adds a €3 ($3.28) charge to online book sales — the company’s original business model. Amazon isn’t alone, the European Commission has also raised concerns about the law, which is supposed to give France’s independent bookshops a leg up.