Amazon won an early (partial) victory in a court challenge related to the European Union’s designation of its e-commerce marketplace as subject to the strictest level of regulation under the bloc’s recently rebooted digital rulebook, the Digital Services Act. (DSA).
Today, the EU General Court ruled in its favor by agreeing to suspend the DSA’s requirement that Amazon must make an ad library public.
However, the Court did not agree to suspend a separate DSA requirement on Amazon to offer store users a non-profiling option to drive the recommendations it offers them.
In April, Amazon’s Store was one of 19 platforms listed as subject to the strictest level of regulation under the DSA, which seeks to apply a greater degree of transparency and accountability to larger platforms and their algorithms.
The e-commerce giant quickly questioned its designation as a VLOP (aka very large online platform). It also requested interim measures to suspend certain requirements under the regulation pending a decision on the broader legal challenge.
On the ad library issue, Amazon’s lawyers had 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», according to the ruling.
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The company further claimed that disclosure of the advertising information would weaken its competitive position and lead to an irreversible loss of market share, as well as harming its advertising partners.
The General Court agreed that Amazon had established that the disclosure of the information, prior to a decision on its challenge to VLOP status, could cause it serious and irreversible commercial harm, although this is assuming that the advertising information in question is truly confidential (the Commission lawyers had suggested, to the contrary, that most of the data that the DSA requires to be aggregated in the ad library is already public).
The judge who heard Amazon’s request for provisional measures did not delve into this and worked under the premise that the information is confidential. (But the ruling also suggests «prima facie that, at a minimum, some of the information that the applicant must publish in its ad repository has not yet been made available to the public,» although it notes that the main proceedings will examine this issue more details.)
According to the ruling, Amazon is working on compiling a library of ads, and may still be required to put the data online if its broader legal challenge to the Commission’s VLOP designation fails.
Regarding recommendation systems, where Amazon was unsuccessful in its request for interim measures, its lawyers again attempted to argue that the DSA’s obligation for VLOPs to offer users the option to opt out of profile-based recommendations would result in a significant and irreversible loss of its market share, causing serious and irreparable damage.
The e-commerce giant argued that without the ability to customize the products users see, it would face significant obstacles in meeting customer expectations, suggesting this would lead to a poor shopping experience for users who may not realize the impacts of opting out of profile-based recommendations.
Amazon also suggested that offering a switch for this form of personalization would hurt third-party sellers who use its marketplace to reach customers.
However, the tech giant was unable to quantify the level of damage claimed to its business, offering only a rough estimate of the negative impact of opting out of the recommendation system, which it suggested could be within a range of between $500 million and 3.8 billion dollars.
In the ruling, the Court notes that the DSA does not require any profile-based recommendation system, simply that users be given the option to opt out, further noting that Amazon remains free to inform users about the impacts that such choices might have in their lives experience of your platform.
He also expresses skepticism about Amazon’s claim that the existence of an opt-out would reduce usage of its Store, as customers could choose to turn profile recommendations back on.
Given the level of uncertainty surrounding the impacts in this case, the Court did not find that Amazon had established the existence of irreparable harm to the legal standard required to grant provisional measures, refusing to suspend this DSA requirement.
Amazon’s broader challenge to its designation as a VLOP under the regulation continues.