App developers are seeing a new question when (re)registering on app stores like Apple’s App Store: Are you a “trader”? This can be a perplexing question, and, as an app developer, you might be wondering whether you qualify as a “trader” under the European Union’s Digital Services Act (DSA). You may also be unsure what saying “yes” means. This blog post will guide you through the criteria for being classified as a trader under the DSA and explain the implications for app developers.
Background on the DSA
The DSA is a comprehensive regulation aimed at overseeing online intermediaries to protect consumers and ensure transparency. It applies to (1) intermediary services offering network infrastructure (such as internet access providers and domain name registrars), (2) hosting services (such as cloud and web hosting services), (3) online platforms connecting sellers and consumers (such as app stores), and (4) certain very large online platforms and search engines (identified here). Compliance obligations under the DSA increase based on the category of the intermediary. (For more information about the DSA, see our previous blog article.)
Under Article 30 of the DSA, providers of online platforms have a duty to obtain and disclose certain information about traders on their platforms who offer products or services to consumers in the EU—specifically, online platforms must:
- Gather basic information about traders on their marketplaces;
- Verify the accuracy of the trader information; and
- Disclose to consumers details of the traders who use their services to market their goods/services.
Further, Article 31 requires online platforms to design their online interfaces in such a way that those traders can provide their names, addresses, telephone numbers, and email addresses. Because Apple, for example, is an online platform covered by the DSA, it must comply with these requirements for all “traders” who offer apps on its App Store.
Who Qualifies as a “Trader” Under the DSA?
The term “trader” under the DSA draws from EU consumer protection law, specifically Directive 2005/29/EC, which defines a “trader” as any natural or legal person acting for purposes related to their trade, business, craft, or profession. This includes those acting on behalf of another trader. Stated generally, the concept is designed to separate individuals acting in a non-commercial capacity from “traders” who are engaged in commercial activities and subject to unfair business practices laws.
The European Commission has dealt with the interpretation of this term in its guidance on the Directive, which notes that a case-by-case assessment must be made to determine whether an individual or organization qualifies as a trader. For this purpose, the guidance refers to criteria provided in the Kamenova judgement. In that case, an individual had posted eight online advertisements for various new and second-hand goods. The European Court of Justice ruled that merely intending to generate profit or posting multiple ads does not automatically classify a person as a trader. Various non-exhaustive and non-exclusive criteria must be considered:
- Profit-Seeking Motive: Does the seller seek to make a profit? This includes receiving compensation for acting on behalf of another trader.
- Transaction Frequency and Volume: How many transactions does the seller conduct, and how often?
- Sales Turnover: What is the seller’s total sales revenue?
- Resale of Products: Does the seller purchase products to resell them?
- VAT Registration: Is the seller registered for VAT?
- Organized Sales Activity: Are the sales conducted in an organized manner?
- Legal Status for Commercial Activities: Does the seller have a legal status enabling them to engage in commercial activities?
- Type and Value of Goods: Are the goods similar in type and value, and is the offer concentrated on a few products?
- Technical Expertise: Does the seller possess technical knowledge about the products, giving them an advantage over consumers?
- Regularity of Resale Activity: Is reselling goods a regular and frequent activity for the seller?
Implications for App Developers
If you would like to list your app on Apple’s App Store and you are a trader as defined by the DSA, Apple will need some information from you, such as your name, address, and contact details. Apple will verify the accuracy of this information. Your contact details will then be disclosed to consumers to ensure transparency and compliance.
If you are an app developer, you therefore need to evaluate whether your activities classify you as a trader, because Apple might require you to provide the above information. Here are some key considerations that can be used to determine whether you are a “trader” under the DSA:
- Commercial Intent: If you develop apps to generate income, either through sales or in-app purchases, you likely have a profit-seeking motive.
- Frequency of Transactions: Regularly publishing and updating apps indicates organized commercial activity.
- Type of Goods: Developing multiple apps of a similar type can point to an organized commercial effort.
- Technical Expertise: Your specialized knowledge in app development positions you differently compared to the general public.
- VAT Registration: If you are VAT registered, this supports your classification as a trader.
Keep in mind that the concept of a “trader” is intended to be broad and will likely capture most app developers, particularly those conducting commercial activities through their app. By understanding whether you are a trader, you can ensure you provide the necessary information to Apple and comply with the DSA. This transparency benefits consumers and helps maintain trust in the digital marketplace. Self-designating as a “trader” does not bring further corollary obligations under the DSA for the app developer (given that the DSA regulates intermediaries), but it is a recognition that the app is subject to, and should comply with, general EU business laws.
For further details on how these regulations may apply specifically to your situation, reach out to the VeraSafe team.
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Decoding the EU-U.S. Data Privacy Framework
Accidental Data Breach? Misdirected Emails Can Land You in Hot Water
Related topic(s): Digital Services Act, EU Privacy Laws
