Amazon must now share details about the ads it serves in the European Union through a public library.
The retail giant is being forced to provide more transparency about its ad operations under the EU’s Digital Services Act (DSA) after losing an appeal in the Court of Justice of the EU (CJEU) for a temporary suspension.
Why we care. The creation of an Amazon ads library will offer marketers valuable insights into how the retail giant showcases and profits from campaigns. This will empower them to optimize their ads more effectively for better performance on the platform.
What is the Digital Markets Act (DMA)? The DMA is a piece of legislation introduced in 2022 designed to ensure that large online platforms, called “gatekeepers”, behave in a fair way online to create a fair and open environment for online businesses. Only six gatekeepers have obligations under the DMA:
- Alphabet (Google’s parent company).
- Apple.
- Meta.
- Amazon.
- Microsoft.
- ByteDance.
All six companies, none of which are based in the EU, were required to ensure they fully complied with DMA obligations and submit compliance reports by March 7.
DMA violation penalties. The consequences of non-compliance with the DMA includes:
- Fines: Up to 10% of the company’s total worldwide annual turnover, or up to 20% in the event of repeated infringements.
- Periodic penalty payments: Up to 5% of a company’s average daily turnover.
- Remedies: These can include behavioral and structural remedies, such as the divestiture of (parts of) a business.
Amazon contests DSA requirements. Amazon challenged the requirement to follow the ads transparency rule in the DSA in September last year. As a result, the EU General Court temporarily halted the ads library until the issue is resolved.
Decision reversal. This week, the CJEU overturned the decision to temporarily suspend Amazon’s requirement to comply with the ads transparency provision. The court ruled that Amazon must now adhere to publishing an ads library. While the court recognized Amazon’s concerns about compliance, they emphasized the importance of upholding the intentions of EU lawmakers in passing the law. Delaying compliance could undermine the objectives of the DSA, potentially for several years.
What the CJEU is saying. The CJEU said in a statement:
- “Suspension would lead to a delay, potentially for several years, in the full achievement of the objectives of the Regulation on a Single Market for Digital Services and therefore potentially allow an online environment threatening fundamental rights to persist or develop, whereas the EU legislature considered that very large platforms play an important role in that environment. “T
- “The interests defended by the EU legislature prevail, in the present case, over Amazon’s material interests, with the result that the balancing of interests weighs in favor of rejecting the request for suspension.”
What Amazon is saying. An Amazon spokesperson told Tech Crunch:
- “We are disappointed with this decision, and maintain that Amazon doesn’t fit the description of a ‘Very Large Online Platform’ (VLOP) under the DSA, and should not be designated as such.”
- “Customer safety is a top priority for us at Amazon, and we continue to work closely with the EC with regard to our obligations under the DSA.”
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Deep dive. Read the CJEU’s statement on its decision in full for more information.
