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Amazon Challenges Inclusion in EU Online Content Rules
Amazon's Petition in Luxembourg's General Court
Amazon has filed a petition in Luxembourg's General Court, challenging its inclusion in the European Union's list of companies subject to stricter online content rules. The e-retailer argues against being designated as one of the "very large online platforms" (VLOPs) under the EU's Digital Services Act (DSA), which imposes regulations on policing illegal material on platforms. This marks the first U.S. challenge to the proposed legislation.
Dispute Over VLOP Designation
Amazon disputes its classification as a VLOP under the DSA, claiming that the designation should apply to companies whose primary revenue comes from advertising and the distribution of speech and information. The company states that the majority of its revenue comes from its retail business, and none of the largest retailers in each European country has been designated as a VLOP. Amazon argues that singling them out would lead to unfair treatment and impose unnecessary administrative obligations that don't benefit EU consumers.
The European Commission's Digital Services Act
The DSA, implemented in November, requires companies with over 45 million monthly active users to comply with rules regarding hate speech, disinformation, and counterfeits on their platforms. These companies must conduct risk assessments, undergo external and independent auditing, and fulfill other compliance measures. Failure to comply could result in fines of up to 6% of their annual revenue.
Other Tech Giants and Legal Challenges
In addition to Amazon, other U.S. tech giants such as Google, Meta, and Apple are also subjected to the EU's online content rules. Last month, German online retailer Zalando filed a lawsuit disputing its designation as a VLOP, emphasizing that retail constitutes the majority of its business. The outcome of these legal challenges will play a significant role in determining the extent of regulatory scrutiny faced by major online platforms in the EU.
Conclusion: Implications for New Businesses
The ongoing dispute between Amazon and the European Union regarding online content rules has significant implications for new businesses looking to establish themselves as online platforms. While the legal battles primarily involve tech giants like Amazon, Google, Meta, and Apple, the outcome will set a precedent that could directly impact smaller businesses entering the European market.
The European Commission's Digital Services Act (DSA) aims to regulate illegal material on online platforms, with specific requirements for companies categorized as "very large online platforms" (VLOPs). These requirements include conducting risk assessments, external audits, and complying with rules on hate speech, disinformation, and counterfeits. For new businesses aspiring to become successful online platforms, they must carefully consider how these regulations could affect their operations and growth.
If the EU imposes stringent compliance measures only on established VLOPs, it might create a barrier to entry for new businesses. The administrative burdens and potential fines associated with non-compliance could significantly impact resources and hinder growth prospects. Moreover, if smaller companies observe the legal challenges faced by Amazon and other tech giants, they may be dissuaded from expanding into the EU market altogether.
On the other hand, if the legal challenges prove successful for Amazon and others, it could establish a precedent that ensures fair treatment and avoids the imposition of unnecessary regulations on businesses whose primary revenue source is not advertising or information distribution. This outcome could provide a more conducive environment for new online platforms to thrive and grow within the EU market.
In conclusion, the ongoing legal battles between tech giants and the EU over online content rules will impact how new businesses navigate regulatory landscapes. It is crucial for emerging online platforms to closely monitor the outcome of these challenges and adapt their strategies accordingly to ensure compliance and maximize their chances of success in the European market.
Article First Published at: https://www.cnbc.com/2023/07/11/amazon-launches-first-us-challenge-to-eu-content-rules.html