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17.10.2023 | KPMG Law Insights

Digital Services Act: Amazon achieves partial success before the ECJ

For the time being, Amazon is not required to disclose an advertising directory with detailed information on advertising activities. This was decided by the Court of Justice of the European Union (CFI). Amazon had applied for a suspension of enforcement of obligations arising from its classification as a very large online platform under the Digital Services Act (Directive 2000/31/EC, also DSA or Digital Services Act) by the EU Commission. The ECJ granted the application in part and suspended the obligation to publish a list of advertisements until a decision has been reached on Amazon’s main action.

According to the ECJ, Amazon may otherwise suffer serious and irreparable damage. However, according to the ECJ, no such damage is threatened by the fact that Amazon has to set up an opt-out option for its recommendation systems.

Subject of the decision: Duties of a very large online platform under the DSA.

The Digital Services Act, which has already come into force and will apply from February 2024, provides for the European Commission to designate very large online platforms or very large online search engines by decision. In addition to general obligations under the Digital Service Act, these are subject to further, special obligations, such as obligations to strengthen users’ ability to act and strong protection of minors . The European Commission has classified Amazon and 16 other platforms as very large online platforms. Amazon is defending itself against the consequences of the classification and against the classification itself and is taking legal action before the Court of Justice of the European Union. At the same time, Amazon applied for an interim injunction to temporarily suspend the execution of the Commission’s decision, which has now been decided.

ECJ: Disclosure of advertising directory could lead to serious and irreparable damage

The application for a temporary stay of execution of the EU Commission’s decision is successful, but only partially. Because Amazon has failed to demonstrate serious and irreparable harm from the mandatory use of an opt-out option for its recommender systems (Art. 38 of the Digital Service Act), the court does not consider this part of the motion to be urgent and denies it. On the other hand, the ECJ recognizes that serious and irreparable harm may result from the mandatory use and disclosure of an advertising directory (Art. 39 of the Digital Service Act). According to the ECJ, the disclosure of the list of advertisements would be unlawful if the court later concluded that there was no obligation under the DSA to do so at all. The Advertising Directory contains strategic and confidential information that enables competitors and the advertisers to gain ongoing market intelligence to the detriment of Amazon and its advertisers. The damage caused by this would no longer be reversible if Amazon were to prevail in the main action as well. As a result, Amazon does not have to publish an advertising directory for the time being.

No binding effect for the main proceedings

The decision is a first partial success for Amazon. The European Court of Justice rejects the European Commission’s argument that the information to be published under Art. 39 of the Digital Service Act must be published anyway due to several legal acts of the European Union and that Amazon therefore suffers no disadvantage. However, the current decision of the ECJ has no binding effect on the main proceedings. Its outcome is completely open. Nonetheless, a very first tendency is discernible as to how the ECJ evaluates Amazon’s argumentation.

 

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