Amazon has achieved a partial victory in its legal battle surrounding the European Union’s (EU) Digital Services Act (DSA). The EU General Court has decided to suspend the requirement for Amazon to make its ads library public under the DSA. However, the court did not grant a suspension for another DSA requirement, which mandates that Amazon provide users with a non-profiling option for the recommendations it delivers.
Key Takeaway
Amazon has won an interim stay on the requirement to make its ads library public under the EU’s Digital Services Act, but the non-profiling option for recommendations remains in effect. The court ruling acknowledges the potential harm caused by releasing confidential ad information and the significance of customization for Amazon’s platform, but it does not grant a suspension for the recommender system opt-out. The legal battle surrounding Amazon’s VLOP designation under the DSA continues.
Amazon’s Fight Against Strict Regulation
Amazon, along with 18 other platforms, was classified as a very large online platform (VLOP) and subjected to rigorous regulation under the DSA in April. The company quickly contested its VLOP designation and filed for interim measures to suspend specific requirements under the regulation while awaiting a decision on its broader legal challenge.
The Impact of Publicizing the Ads Library
In relation to the requirement to publish an ads archive, Amazon argued that disclosing confidential information would cause significant and irreparable harm to its advertising activities and overall business. The company asserted that the release of ad information would weaken its competitive position, result in an irreversible loss of market share, and harm its advertising partners.
The General Court agreed with Amazon’s argument that releasing the ad information before a decision on its VLOP status challenge could cause serious and irreversible commercial harm. Although it assumed the ad data is confidential, the ruling suggests that some of the information required in the ad library has not been publicly disclosed. The main proceedings will examine this issue further.
Although Amazon is currently compiling an ads library, it may still be required to make the data public if its broader legal challenge against the VLOP designation is unsuccessful.
The Battle Over Recommender Systems
While Amazon did not succeed in its application for interim measures regarding recommender systems, the company argued that the DSA’s obligation for VLOPs to offer users an opt-out of profiling-based recommendations would result in a significant and irreversible loss of market share. Amazon claimed that without the ability to customize product recommendations, it would struggle to meet customer expectations, leading to a negative shopping experience for users who may not realize the implications of opting out. Amazon also expressed concerns that providing an off-switch for customization would harm third-party sellers using its marketplace.
However, Amazon failed to quantify the level of harm to its business, offering only a rough estimate of a potential negative impact ranging from $500 million to $3.8 billion. The Court noted that the DSA does not prohibit profiling-based recommender systems but merely requires an opt-out option for users. It also expressed skepticism regarding Amazon’s claim that the existence of an opt-out would reduce the use of its platform, as users could choose to switch the profiling recommendations back on.
As a result of the uncertainty surrounding the actual impact, the Court determined that Amazon did not prove the existence of irreparable harm to meet the required legal standard for interim measures, resulting in the denial of suspension for this DSA requirement.
Amazon’s broader legal challenge against its VLOP designation under the DSA is ongoing.
