On 17 April 2019, the European Parliament approved a new Regulation on platform-to-business trading practices. It requires online platforms and online search engines to comply with certain legal obligations and also encourages them to take voluntary complimentary steps. The Regulation aims to ensure that businesses using online intermediation services and general online search engines have greater certainty and clarity with respect to the rules governing their relationships with these platforms and how to resolve potential disputes.
The text adopted by the European Parliament has not yet been formally approved by the Council of the EU. Once approved, the Regulation will enter into force 12 months after its publication in the Official Journal.
Online search engines and platforms generate the vast majority of internet traffic for big businesses as well as small and medium-sized enterprises (SMEs). However, it has been deemed important to address structural issues and to prevent unfair business trading practices. The intermediary role of these online platforms may allow them to engage in unfair trading practices which may cause economic harm to the businesses that use them. Additionally, the online visibility of small businesses can depend on their position in search results. The Regulation is designed with SME’s in mind, to ensure that they will no longer be faced with “unexplained account suspensions, opaque rankings in search results, unaffordable dispute resolutions and many other unfair practices”.
Scope of the Regulation
The Regulation covers online platform intermediaries and online search engines providing services to businesses established within the EU, and that offer goods or services to consumers located in the EU. Online platform intermediaries include third-party e-commerce market places (e.g. Amazon Marketplace, eBay etc.), app stores (e.g. Google Play, Apple App Store etc.), social media for business (e.g. Facebook pages, Instagram used by makers/artists etc.) and price comparison tools (e.g. Skyscanner, Google Shopping etc.). Online search engines that facilitate web searches based on a query and provide results in a format corresponding to the request (e.g. Google, Bing etc.) are also covered by the new Regulation.
The Regulation excludes certain services, including payment services, online advertising, and search engine optimisation. It also excludes online retailers, such as supermarkets, and retailers of brands to the extent that they sell only their own products.
Impact of the New Rules
The key obligations of online platform intermediaries and online search engines under the new Regulation are:
- Terms and conditions must be easily available and provided in clear and plain language. Changes must be announced in advance.
- Platforms should not prevent the business user from making its identity visible.
- Platforms and search engines will have to inform businesses how they treat and rank goods or services offered by themselves or by businesses they control compared to third party businesses, either in the terms and conditions or in a publicly available document. Businesses should also be informed how online platforms can influence their ranking position. Search engines will need to inform consumers if the ranking result has been influenced by any agreement with the website user.
- If a platform decides to restrict, suspend or terminate a business’ account, it must provide a statement of reasons to the business concerned, give 30 days prior warning in most instances of termination and preserve the data associated with business users’ account.
- The Regulation provides an effective and quick means to resolve disputes between businesses and online platforms including an internal complaint handling system, and naming specialised mediators.
Member states shall need to take sufficient deterring measures to ensure that the platforms and search engines comply with the requirements in the Regulation. Associations or organisations representing businesses can take action in national courts in order to stop or prohibit non-compliance with the Regulation.
Online platforms will need to review their terms and conditions to ensure they are clear and unambiguous, and make them easily available to business users. Otherwise the terms and conditions, or at least specific provisions, may be null and void, creating business disruption issues for the online platform.
Businesses will have greater legal certainty and clarity with respect to the rules governing their relationships with these platforms and how to resolve potential disputes.