On virtue of DSA providers of very large online platforms (VLOP) must make available a repository containing advertisements presented on the platform during a period of one year. Repositories should comprise the content of advertisements, including the name of the product, service or brand and the subject matter of the advertisement as well as related data on the advertiser, and, if different, the natural or legal person who paid for the advertisement. This information should include both information about targeting criteria and delivery criteria, especially when advertisements are delivered to vulnerable persons, such as minors.
This obligation is intended to ensure proper oversight of companies that determine the content of targeted advertising, with the objective, once again, of achieving greater transparency.
According to Article 33 of the DSA, these obligations apply to online platforms and search engines with an average of at least 45 million active service recipients per month in the Union and which have been designated as very large online platforms or very large search engines. On 25 April 2023 the European Commission adopted the first designation decisions under the Digital Services Act. Upon their designation, companies had to comply within the next four months with the full set of new obligations under the DSA.
There were 17 entities designated as very large online platforms - Alibaba AliExpress, Amazon Store, Apple AppStore, Booking.com, Facebook, Google Play, Google Maps, Google Shopping, Instagram, LinkedIn, Pinterest, Snapchat, TikTok, Twitter, Wikipedia, YouTube, Zalando. The category of very large search engines included 2 entities - Bing, Google Search.
At this point, it is worth mentioning that of the entities that have been identified as very large online platforms, as many as two disagree with their inclusion in this category. Zalando filed a complaint against the European Commission before the Court of Justice of the European Union, challenging its designation as a very large online platform on 27 June 2023 (ref. T-348/23). In its complaint, it raised the following allegations:
- misapplication of the scope of the DSA and an error of law in applying that regulation by claiming that it is no longer an intermediate service provider, ergo the DSA does not apply to Zalando;
- Article 33(1) and (4) in conjunction with Article 24(2) of the DSA are vague, which relate to the requirements related to the calculation of the threshold value of active recipients;
- infringement of the general principle of equality due to the imprecision of the method for calculating the number of active recipients, which translates into unequal treatment of online platform providers;
- infringement of the principles of proportionality as a result of disproportionate interference with Zalando's fundamental rights and freedoms;
- infringement of the obligation to state reasons under Article 296 TFEU.
Amazon did the same by filing a complaint on 5 July 2023 (ref. T-367/23), raising the following allegations:
- the designation of Amazon as a VLOP is based on discriminatory criteria and violates Amazon's equal treatment principles and fundamental rights;
- Articles 38 and 39 of the DSA violate Amazon's equal treatment and fundamental rights.
Amazon, in a separate submission filed on 6 July 2023, made an application for interim measures requesting that the President of the General Court order suspension of operation of the contested decision in so far as it imposes on the applicant:
- the obligation to provide users with an option for each of its recommender systems which is not based on profiling under Article 38 of DSA;
- the obligation to compile and make publicly available an advertisement repository under Article 39 of DSA;
until a final decision in the main proceedings has been rendered by the General Court.
In case of Amazon its request to a decision on the present application for interim measures cannot be taken before 1 August 2023, order an immediate suspension of the applicant’s aforementioned obligations to provide users with an option for each recommender system used on Amazon Store which is not based on profiling and the applicant’s obligation to provide an advertisement repository for advertisements placed on Amazon Store pursuant to Article 157(2) of the Rules of Procedure of the General Court until such time as the President of the Court has heard and determined the present application in order to prevent irreparable harm to the applicant.
The 27 September 2023 is a landmark day for the Digital Services Act, as it is the day on which the order of the President of the General Court was issued in relation to the said application brought by Amazon, which is at the same time the first order issued in relation to the Digital Services Act.
According to the order, Amazon Store will not be required to make an advertisement repository publicly available, in accordance with Article 39 DSA, without prejudice to the requirement for the applicant to compile the advertisement repository. Although Amazon did not obtain interim measures to the full extent it requested, one can speak of certain success achived.
On the issue of the ad repository, Amazon's lawyers argued that the requirement to publish an ad archive would result in the disclosure of confidential information that would cause "serious and irreparable harm to its advertising activities and, by extension, to all its activities." Amazon also argued that disclosure of the advertising information would weaken its competitive position and cause irreparable loss of market share, as well as harm its advertising partners. The Court found that Amazon had demonstrated that such disclosure, prior to rendering its decision on challenge to VLOP status, could cause serious and irreparable commercial harm - albeit assuming that the advertising information in question was indeed confidential (Commission lawyers had suggested to the contrary that much of the data required by the DSA to collect in the advertising library was already public).
Concerning the part of the application relating to Article 38 of the DSA - the recommendation system, however, the Court did not agree to suspend the operation of separate requirement that Amazon must offer store users a non-profiling option that powers the recommendations it makes to them. The Court did not accept Amazon's arguments relating to meeting user expectations and negative shopping experiences for users who may not realize the impact of opting out of profiling-based recommendations. Amazon was unable to determine the exact size of the alleged harm to its business, pointing to a range between $500 million and $3.8 billion.
We may expect the Court ruling in Zalando case to be rendered soon. The decisions issued in both cases will be a guidance for practical enforcement of DSA.
