Oliver Fairhurst reviews the New EU Platforms Regulation and how it might affect the likes of Amazon, eBay, Apple, Google, Uber and Deliveroo.

The European Parliament, the Council of the EU and the European Commission have announced that they have reached informal agreement on the proposed ‘Regulation on promoting fairness and transparency for business users of online intermediation services’ 2018/0112 (COD) (the Regulation). While the Regulation remains to be formally adopted, it is highly likely that it will become law at some point in 2020.

 

Who is affected?

The Regulation applies to “online intermediation services and online search engines” servicing businesses in the EU that offer goods or services to consumers in the EU (even if the platform itself is based outside the EU). This means that the Regulation affects both the platforms themselves and the users of them. Representative bodies such as trade associations might also be affected in that they will be able to bring proceedings in national courts to enforce compliance with the Regulation. The proposal excludes online advertising and payment services that do not intermediate direct transactions between businesses and consumers, as well as intermediaries that operate between businesses only (eg programmatic advertising exchanges).

The Regulation will affect a large range of platforms from marketplaces (eg eBay and Amazon), app stores (eg Google Play and Apple’s App Store), price comparison and booking websites, and even some social media platforms such as Facebook, Instagram and LinkedIn (insofar as they provide services to businesses).

There is some uncertainty as to whether services such as Uber and Deliveroo would be caught by the definition. The Commission and Uber both appear to believe that it would (see here and here). However, while Uber and Deliveroo both apparently operate online intermediation services to businesses that cater for consumers in the EU (taxis to passengers and food to customers), and while they would likely disagree, they could be described as transport or delivery services. “Online intermediation services” is limited to services that constitute “information society services” within the meaning of Directive (EU) 2015/1535. In Uber France (Case C-320/16), the CJEU held that Uber provided a “service in the field of transport” rather than an “information society service”.

 

What is the problem?

The Regulation forms part of the Commission’s Digital Single Market Strategy. The Commission is concerned that there is an asymmetry between the market power of the platforms and the large number of (especially small) businesses that use them. While the Commission recognises the importance of platforms for entrepreneurship, trade and innovation, the Commission was concerned with the dependence of businesses on those platforms. In particular, the Commission pointed to abrupt changes to terms of use, delisting or suspending accounts without clear reasons, lack of transparency regarding rankings on platforms, and “most favoured nation” clauses. The Commission proposed the Regulation on 26 April 2018 as part of the Commission’s commitment “to safeguard a fair, predictable, sustainable and trusted business environment in the online economy”.

 

What are the changes?

The Regulation contains the following new rules:

  1. Terms and Conditions:
    Platforms will be required to make terms and conditions clearer, particularly by setting out “objective grounds for decisions to suspend or terminate” services. Platforms will also be required to give at least 15 days’ notice of changes to the terms and conditions applying to the platform. Failure to provide sufficient notice renders the changes null and void.
  2. Suspensions and terminations:
    Platforms will be required to provide any business users with a reasonably detailed statement of reasons for any decision to suspend or terminate (in whole or in part) that user’s account, including which of the “objective grounds” on which the suspension or termination is based.
  3. Transparency over ranking:
    Platforms will be required to explain “the main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters”. Search engines such as Google will be also be required to inform corporate website users of the main parameters determining ranking and keep the information up to date. The main caveat to this requirement is that platforms and search engines will not be required to disclose “trade secrets” within the meaning of EU law (ie truly secret and commercially valuable).
  4. Transparency over differentiated treatment:
    Platforms will have to disclose any advantage they give to their own goods or services over those of other business users.
  5. Transparency over data:
    Platforms will need to describe what personal data or other data that the platform receives through the use of its services. For example, this might include whether or not the platform collects certain behavioural data, and whether it then shares that data with business users.
  6. Restrictions on using other platforms:
    Where platforms restrict the ability of its business users to offer the same goods/services outside of their ecosystem (eg historically, in the e-book market), they must say that they do so and explain the grounds for the restriction in their terms and conditions. This is, in effect, another attack on ‘most favoured nation clauses’ in that it attempts to bring their existence into the public domain.
  7. Dispute resolution and complaint handling:
    All except very small businesses (ie less than 50 employees and turnover of €10m or less) will have to provide effective internal complaint-handling systems. This will be important in relation to allegations of IP infringement in particular, which has been a widely-reported issue in relation to YouTube especially. Platforms will need to agree to use a mediator to decide any disputes (and that mediator must generally be located in the EU, which could be important post-Brexit).

 

How is it enforced?

In addition to being enforceable directly by business users against the platforms through court proceedings, the Regulation permits “Organisations and associations that have a legitimate interest in representing business users or in representing corporate website users, as well as public bodies set up in Member States” to bring proceedings to stop or prohibit any non-compliance with the regulation. In effect, this could mean associations of, say, advertisers bringing proceedings against platforms or search engines. Member states are also able to appoint public authorities with enforcement powers to which businesses can complain.

 

Comment

The most immediate impact on platforms and search engines will be the need to shore up their terms and conditions in order to make them compliant. Such firms will also need to consider what mediation and complaint handling processes they will put in place.

How platforms and search engines deal with the transparency requirements will be interesting. While algorithms are much studied, they also represent something of a black box and the company will want to resist allowing in too much light.

 


 

You can find further information regarding our expertise, experience and team on our Media Disputes page.

If you require assistance from our team, please contact us or alternatively request a call back from one of our lawyers by submitting this form.

 


 

Subscribe – In order to receive our news straight to your inbox, subscribe here. Our newsletters are sent no more than once a month.