Laureline Lemoine, Senior Associate, AWO Agency
Photo credit: KarleHorn, via Wikimedia Commons
On September 27, 2023, the President of the General Court, Marc van der Woude, issued an order in the case of T‑367/23 R Amazon Services Europe v Commission, one of the first legal challenges against the Digital Services Act (DSA). The order sheds light on Amazon's stance and the arguments that can be anticipated in the main proceedings, and has potential implications for other providers of very large online platforms (VLOP).
Amazon was designated as a Very Large Online Platform (VLOP) by the European Commission on 25 April 2023. This designation meant that Amazon, along with other VLOPs, had until 25 August 2023 to comply with DSA obligations, while other entities (platforms, intermediaries) have until 17 February 2024. In response, Amazon initiated legal action to annul the Commission's VLOP designation, asserting that it infringed upon principles of equal treatment and constituted a disproportionate restriction on its rights. However, as EU acts are presumed lawful, Amazon was required to comply with DSA obligations throughout the proceedings, leading them to request interim measures to suspend specific obligations stemming from their VLOP designation.
Examining Amazon's arguments
One of Amazon's primary concerns was Article 38 of the DSA, which mandates an opt-out for recommender systems based on user profiling. Amazon argued that this requirement would adversely impact their business, customers, and third-party sellers. However, President Marc van der Woude noted that Article 38 does not prohibit the use of such systems but merely offers users an opt-out option, and suggested that Amazon could inform customers effectively about the benefits and risks of such an option. The President suggested that platforms could employ “precise and effective measures” to inform customers of the “benefits of the recommender systems and the risks that will ensue from opting out”. In this context, Amazon could only claim financial harm, which, based on the evidence, was deemed insufficient to imperil its financial viability before the final judgement. Consequently, no interim measures were granted concerning Article 38 of the DSA.
The suggestion from the Court could lead to platforms employing pop-ups and persuasive language to prompt users to continue using profiling-based recommender systems, similar to how they request users to approve personalised advertising via cookie banners.
Amazon's objections were more substantial concerning Article 39, where it argued that the obligation to publish an advertisement repository would expose confidential information, causing harm to their advertising activities and partners and leading to the loss of consumers.
For the purpose of interim proceedings, the President had to assume the confidentiality of the information and therefore agreed that the repository revealed sensitive information, which could potentially be exploited by competitors. The Commission tried to counter-argue that the main novelty of the DSA was to consolidate information, explaining that Amazon was already obligated to disclose most of the required information under existing EU legal acts. However, the President highlighted that certain elements of the DSA, particularly pertaining to the duration of advertisements (Article 39(2)(d) DSA) and the total of recipients reached (Article 39(2)(g)), appeared to be genuinely new and not covered by previous legislation.
One of the key issues of the main proceedings will therefore centre around the question whether the information Amazon is supposed to publish under Article 39 is genuinely confidential. To prevent jeopardising the ongoing main proceedings, the General Court President chose to suspend Amazon’s obligation to make the advertisement repository public, but Amazon is still required to create and compile the repository pending the outcome of the main proceedings.
Implications for VLOPs
The outcome of this interim proceeding has broader implications, especially for other VLOPs.
The absence of a clear case and the failure to demonstrate real harm in these interim proceedings regarding Article 38 could deter other VLOPs from pursuing similar challenges. Since Article 38 offers an opt-out mechanism closely aligning with GDPR principles, it also makes it less likely to be contested.
Conversely, other VLOPs could argue that Article 39 directly impacts their core business models as well. The fact that Amazon obtained a suspension may inspire them to explore similar avenues, given their shared concerns and arguments, which could increase their chances of securing a similar exemption.
The interim proceedings in the case of T‑367/23 R Amazon Services Europe v Commission provides interesting insights into how Amazon is navigating their obligations under the DSA. The legal processes and arguments emerging from this case offer a glimpse of what is to come and as this case unfolds, it will continue to be a focal point in the broader discussion surrounding DSA enforcement and its implementation.