Voice of the Industry

Regulating platforms in the EU: The pursuit of a 'fairer' online platform environment

Wednesday 1 April 2020 08:20 CET | Editor: Simona Negru | Voice of the industry

Juliette Beaulaton, Ecommerce Europe, discusses about European policymakers’ attempts to build a legal framework that would reconcile the interest of businesses, platforms, consumers, and citizens

This editorial was first published in December 2019, in our Cross-Border Payments and Commerce Report 2019 – 2020, which provides a comprehensive overview the major trends driving growth in cross-border payments, cross-border commerce, and marketplaces.

Online platforms and the growth of the platform economy have redefined the way people and companies exchange information, services, and goods online. This undeniable importance of online platforms in the global economy and citizens’ lives represents a real headache for European policymakers, who have shown strong willingness to increasingly regulate the online platform ecosystem. When discussing about regulating online platforms in the EU, the narrative focuses overwhelmingly on key concepts such as fairness, transparency, ethic, and other core values that seemed to define the foundation of a ‘European way’ to regulate emerging digital challenges.

European policymakers are attempting to build a legal framework that would reconcile the interest of businesses, platforms, consumers, and citizens, while creating an environment where platforms can still grow and benefit the European economy.

According to the Observatory on the Online Platforms Economy, ‘Online platforms or online intermediaries are online spaces in which the platform operator brings together users to facilitate interactions such as the exchange of information or commercial transactions. Online platforms include ecommerce marketplaces, online app stores, online search engines, social media, and online media platforms’.

The development of online platforms and the way they are regulated have a special significance for digital commerce. They represent a key opportunity for businesses to operate cross border, especially for smaller companies. According to the European Commission, more than 50% of SMEs selling through online marketplaces sell cross border, and 22% of the value of ecommerce is generated by businesses selling their products and services on online platforms.

On the one hand, EU policies have focused on the relationship between platforms and their business users, in order to ensure greater transparency and trust in the online ecosystem. This has materialised through different legislations focusing both on businesses and on consumers. 

A key piece of legislation in that regard is the EU Regulation on promoting fairness and transparency for business users of online intermediation services, which focuses on platform-to-business (P2B) relations. This Regulation stems from the observation that, because of the growth of platforms, their users may find themselves increasingly dependent, and this could result in an asymmetry of power that could lead to potentially harmful trading practices. This law – which will take effect as of July 2020 – aims at increasing transparency and clarity for terms and conditions, access to data policies, ranking rules, preferential treatment, contract clauses, and so on. It also improves and harmonises redress mechanisms that must be put in place. This piece of legislation was overall welcomed by the wider business community as a principle-based solution.

Users of platforms can indeed be businesses using intermediaries to reach new consumers. However, consumers themselves also interact with platforms. In its ‘New Deal for Consumers’ package, the Commission – by means of amendments to already existing Consumer Directives – introduces new obligations for marketplaces to inform consumers whether they are buying from a trader or a private individual, so that they are aware of their rights if there is a problem with the product. Moreover, it obliges platforms to disclose the main parameters behind the ranking of the results (to show if the search results are being paid for by a trader, for example).

To some extent, the expected Digital Services Act (DSA), which has been announced by the new European Commission President, Ursula von der Leyen, will also fit in this category. This new initiative has the ambition to redefine the horizontal regulatory framework for all digital services – including online platforms and digital commerce – and upgrade the Union’s liability and safety rules for digital platforms, services, and products. The DSA will most likely result in the re-opening of the ‘Electronic Commerce Directive’ of 2000, which laid down the basic principles of liability for the online intermediaries that we know today.

But the DSA touches upon other objectives pursued by the Commission in regulating platforms. Indeed, on the other hand, EU policies have pursued slightly more challenging policy initiatives that focus on platforms’ responsibilities in protecting people and core values. This notably comes from the observation that the platforms’ role has now gone beyond the economic sphere, and they have taken a new role in people’s lives and the European democracies.

The broader liability framework and the question of responsibility are expected to be regulated through the upcoming DSA. The Act is expected to propose new ways to regulate content on intermediary service providers, potentially by requiring a more active role in removing illegal content. It is likely that these changes will attempt to reward the proactive measures taken by online platforms in dealing with illegal content. Currently, the Electronic Commerce Directive exempts intermediaries from liability for the content they host if they fulfil certain conditions: service providers hosting illegal content need to remove it or disable access to it as fast as possible once they are aware of the illegal nature of it; only services who play a neutral, merely technical and passive role towards the hosted content are covered by the liability exemption. The discussions around the Digital Services Act are expected to be difficult, with questions of content moderation, responsibility, freedom, or ‘censorship’ inevitably coming back on the table.

The European Commissioners’ hearings and certain leaked documents seem to confirm that the EU will continue to try to define its own approach to digital challenges, attempting to differentiate itself on the global stage in comparison to its competitors, like China and the US.

About Juliette Beaulaton

Juliette Beaulaton is Public Affairs Advisor for Ecommerce Europe, where she handles all files related to digital transactions and innovation, and supports the work of the Director of European Public Affairs on digital policies, focusing on digital services and online platforms.

About Ecommerce Europe

Ecommerce Europe is the sole voice of the European Digital Commerce sector. As a result of joining forces with EMOTA, Ecommerce Europe now represents, via its 22 national associations, more than 100,000 companies selling goods and services online to consumers in Europe.

Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: Juliette Beaulaton, Ecommerce Europe, regulations, Europe, online platforms, economy, ecommerce, Marketplaces, transactions , P2B, law, directive, digital services
Categories: Banking & Fintech
Countries: Europe
This article is part of category

Banking & Fintech

Industry Events