On 7 December 2020, the European Commission published its new Guidelines on Ranking Transparency pursuant to Regulation (EU) 2019/1150 (the so-called Platform-to-Business or P2B Regulation). The P2B Regulation applies as from 12 July 2020 and seeks to create a fair, transparent and predictable business environment for businesses and traders on online platforms. Article 5 of the P2B Regulation requires providers of online intermediation services to inform business users of the main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters. The new guidelines complement the P2B Regulation and provide further information on complying with this requirement.
The ranking of goods and services is very important as it has a huge impact on the choices made by consumers and, therefore, on the commercial success of the traders offering their goods or services via the online platform. It is even more crucial now as many businesses have moved online due to the ongoing COVID-19 crisis. However, the algorithms or ranking methods used are rarely disclosed to the platforms’ business users. Article 5 of the P2B Regulation along with the new guidelines aim to improve predictability and help users improve the presentation of their goods and services.
These are some of the Commission’s considerations set out in its guidelines:
• Providers should implement a “user-oriented approach” by giving a meaningful explanation of their ranking mechanisms and the main parameters used in plain and intelligible language, without overwhelming users with lengthy or complex descriptions. For the explanation to be meaningful, providers should take account of the nature, technical ability and needs of “average” users of a given service;
• Each provider should conduct an individual assessment to determine what measures they need to take to comply with Article 5. This individual assessment must be conducted in a technologically neutral manner, in the sense that the particular technology used as part of the ranking process is not decisive;
• When conducting the assessment required to identify the main ranking parameters, providers could take into account different considerations, such as price, completed sales, relevance, availability, click-through rates, consumer search behaviour, the user’s past performance, sorting and filtering mechanisms, the user’s cross-platform presence, third-party notifications and user reviews, measures against illegal content, third-party trust marks, industry awards, etc. Annex I of the guidelines contains an extensive list of examples of ranking parameters;
• Each provider has to assess how to best describe the main ranking parameters. However, it has to go beyond a simple enumeration and provide at least a “second layer” of explanatory information that can help users gain an adequate understanding of how the ranking mechanism in question operates. The description must also be kept up to date. Providers should often consider whether they still meet their legal obligations or whether the description needs to be updated;
• If the main parameters include the possibility of influencing the ranking in return for remuneration, the providers should examine the design of these options. The Commission advises providers, as a best practice, to accompany the description of the paid ranking options and the amplitude of their impact with an explanation of the business rationale for that option and its potential impact;
• The Commission points out that the requirement under Article 5 is to provide a description of the main parameters only (as well as the reasons for their relative importance), without providers being required to disclose the detailed functioning of their ranking mechanisms, and that Article 5 of the P2B Regulation is without prejudice to the EU Trade Secrets Directive.
The Commission’s guidelines are not legally binding but aim to facilitate compliance with and enforcement of the P2B Regulation. As such, they are a valuable tool for platforms, traders, authorities and courts and form a new step in the EU’s continuous effort to build the EU digital single market.
Please contact Karel Janssens for further information on these guidelines and/or for general legal advice relating to the digital economy.