Online platforms required by law to be more transparent with EU businesses

Online intermediation services, such as e-commerce market places (e.g. Amazon, eBay) and search engines (e.g. Google Search) will be required to implement a set of measures to ensure that their contractual relations with businesses (e.g. online retailers, hotels and restaurants businesses, app developers) are transparent, under a regulation provisionally agreed by Parliament and Council negotiators on Thursday’s early hours.

The new rules will also apply to app stores (e.g. Apple App Store, Microsoft Store), social media (e.g. Facebook, Instagram) and price comparison tools (e.g. Skyscanner, TripAdvisor).

Quote

Christel Schaldemose (S&D, DK), who steered this legislation through Parliament, said: “It was a tough negotiation, but I´m extremely happy that we found a compromise. This legislation had to be put in place. We couldn´t wait another year or two or three, before making online platforms more transparent and much fairer. It´s a huge and still growing market that we need to regulate, in order to make trading practices fair between the platforms and the businesses. And in the end we also have to protect consumers for whom the platforms have become very important. I´m happy we now have a deal that will make a fairer and more transparent digital inner market.”

Ensure transparency in rankings

Potentially harmful trading practices, such as sudden, unexplained changes in terms and conditions, termination of accounts, unexplained delisting of products and incomprehensible ranking criteria, as well as a lack of effective redress mechanisms, are among the problems in platform-to-business (P2B) relations.

The new rules require online platforms to, amongst others:

• explain the reasons for removing goods or services from search results or delisting them;
• provide a description of the parameters determining the ranking;
• put an end to several unfair trading practices listed in this regulation (“blacklist” introduced in a new article);
• set up an internal complaints-handling system (small platforms would be exempted) and facilitate out-of-court dispute resolution;
• ensure effective enforcement of the regulation;
• give a right to business users to terminate their contracts if platforms impose new unacceptable terms and conditions.

Businesses will be able to sue platforms collectively, if they fail to deal with complaints properly.

Next steps

The provisional agreement still needs to be confirmed by member states’ ambassadors (Coreper) and by the Parliament’s Internal Market and Consumer Protection Committee. The regulation will then be put to a vote by the full Parliament and submitted for approval to the EU Council of Ministers.

Background

It is estimated that around 60% of private consumption and 30% of public consumption of goods and services related to the total digital economy are transacted via online intermediaries.