Online platforms have become key players in the e-commerce market over the past several years. Their position as a gateway to consumers has led businesses (such as hotels, restaurants and any professional selling goods or providing services) to be increasingly dependent on their services. This situation opens a scope for certain unilateral and harmful trading practices, such as delisting of goods or services, suspension of accounts, unexplained changes in terms and conditions without prior notice, favouring of platforms’ own products or services, etc.
Against this background, a political agreement has now been reached by the European Commission, Parliament and Council on a Proposal for a Regulation on promoting fairness and transparency for business users of online intermediation services. The main objective of the Regulation is to re-establish the balance in bargaining power between online platforms and the professional suppliers who use their services.
If adopted, the new Regulation will apply to online platform intermediaries and search engines that provide services to businesses established in the EU and that offer goods or services to consumers located in the EU. This includes e-commerce marketplaces (such as Amazon, eBay, Alibaba, etc.), app stores (such as the Apple App Store, Google Play, etc.), social media for business (Facebook pages, etc.), price comparison tools and booking websites (e.g. Skyscanner, etc.), as well as online search engines such as Google Search and Yahoo!. Excluded from the Regulation’s scope are, for example, online advertising and payment services, as well as intermediaries that operate in a B2B context only. Online retailers such as supermarkets and brand retailers will also be out of scope to the extent that they only sell their own products directly to consumers.
It should be pointed out that, as an online platform must constitute an “information society service” within the meaning of Directive 2015/1535 in order to fall under the Regulation’s scope, there is some uncertainty as to whether services such as UberX and Deliveroo will fall within the scope of the definition. Specifically, although these platforms offer intermediation services, the European Court of Justice (Cases C-434/15 and C-320/16) already held that UberX, i.e. the system that connects professional drivers with passengers via the UberX App, does not qualify as a mere “information society service” but must be classified as a “service in the field of transport” (for more information about UberX, see our previous news item). A similar conclusion could be drawn for Deliveroo, which qualifies as a delivery service rather than an “information society service”.
The Online Platform Regulation contains new rules to ensure the fair, transparent and predictable treatment of business users by online platforms. These include:
- increased transparency measures regarding terms and conditions for professional users of online platforms;
- the obligation to provide a detailed statement of reasons for any decision to suspend or terminate a business user’s account;
- the obligation to describe the main parameters determining rankings and differentiated treatments, except when these parameters contain trade secrets;
- the obligation to disclose any differentiated treatment or advantage given to the platform’s own goods and services over those of business users;
- the obligation for platforms to describe the access, or absence thereof, of business users to personal data or other data which business users or consumers provide for the use of the platform or which are generated through the provision of the platform’s services;
- more transparency regarding the restrictions that platforms may impose on professional users, in particular regarding the use of other distribution channels;
- the obligation to set up an effective internal complaints-handling system and to facilitate out-of-court dispute resolution.
The final text of the Regulation must now be approved by the European Parliament plenary meeting and the Council of the EU. If adopted, the Regulation is expected to significantly impact the platform economy.
Please contact Karel Janssens for further information on this Proposal and/or general legal advice relating to the digital and platform economy.