The EU institutions have approved new regulations designed to increase fairness and transparency on online platforms such as search engines, app stores, booking sites and marketplaces. After publication of the new regulation, websites will have 12 months to implement the changes.
First proposed in April 2018 by the European Commission, the so-called Platform-to-business regulation requires online platforms such as Amazon, Google's search engine or Booking.com to be more transparent about their terms of sale and service, as well as set up internal systems for handling customer complaints. The aim is to prevent harmful trading practices identified in the market, such as sudden, unexplained changes in terms and conditions, suspending accounts, delisting products and difficulties understanding rankings, as well as a lack of effective redress mechanisms for businesses using the online platforms.
The European Commission said the new rules will apply to the entire online platform economy - approximately 7,000 online platforms or market places operating in the EU. This includes "world giants as well as very small start-ups" that have often an important bargaining power vis-a-vis business users and a particular impact on the many SMEs in the EU trying to operate online or across borders. Certain provisions will also apply to search engines, notably those concerning ranking transparency.
SEO disclosure
With the new rules, digital platforms can no longer suspend or terminate a seller's account without clear reasons and a possibility to appeal. The platform will also have to reinstate sellers if a suspension was made in error. They must provide advance notice of at least 15 days of any changes to terms and conditions in "plain and intelligible terms". Longer notice periods apply if the changes require complex adaptions.
Marketplaces and search engines will need to disclose the main parameters they use to rank goods and services on their site, to help sellers understand how to optimise their presence. The rules aim to help sellers without allowing gaming of the ranking system.
The rules also address the EU's competition case against Google over favouring its own shopping comparison service in its search results. According to the new transparency rules, platforms must "exhaustively disclose" any advantage they may give to their own products over others. They must also disclose what data they collect, and how they use it – and in particular how such data is shared with other business partners they have. This is an issue the European Commission is already investigating at Amazon.
Right to mediation
Online sellers using such platforms will also have the right to file complaints and appeal changes in conditions. All platforms must set up an internal complaint-handling system to assist business users. Only the smallest platforms in terms of head count or turnover will be exempt from this obligation. In addition, platforms will have to provide businesses with more options to resolve a potential problem through mediators.
Enforcement is expected to take place through business associations, which can group together interested companies to take platforms to court to stop any non-compliance with the rules. This should help overcome fear of retaliation, and lower the cost of court cases for individual businesses, when the new rules are not followed, the Commission said. In addition, the EU countries can appoint public authorities with enforcement powers if they wish, and businesses can turn to those regulators.
The final agreement was welcomed by one of the main lobby groups in the industry, the Computer & Communications Industry Association, which said the sector supports increasing transparency and predictability. In particular, the association said it was glad that policymakers resisted proposals to introduce stricter regulation of certain business practices or extend the scope of the regulations to more types of business. "It seems EU policymakers understood that imposing such a one-size-fits-all framework makes little sense in one of the most diverse and dynamic sectors of the economy," the group said in a statement.
