More transparent and fair operation of online platforms in the EU
The European Parliament and the Council has adopted a new regulation on fairness and transparency for business users of online intermediation services (“Regulation”). The Regulation sets out a harmonised framework on the transparency and fair operation of the online platforms. The new regulation was adopted on 12 July 2019, however, online platforms have a year to prepare for its application.
Online intermediation services, including e-commerce market places (e.g. Amazon, Alibaba), search engines (e.g. Google search), price comparison sites (e.g. Skyscanner, trivago), app stores (e.g. Apple App Store, Microsoft Store) and social media platforms (e.g. Facebook, Instagram) are required to implement new rules and measures on transparency in their contractual relationships with businesses (e.g. online retailers, hotels and restaurants businesses, app developers) in order to comply with the provisions of the Regulation.
Online platforms are strong drivers of innovation and they have an important role in the EU’s digital economy. It is estimated that today 1 million EU businesses and more than 50% of small and medium enterprises are already selling goods and services via online platforms. Hence, these platforms increase consumer choice and boost competitiveness of industry.
Due to the importance and the size of this market, their harmful trading practices (e.g. unexplained changes in terms and conditions or the lack of an effective redress mechanism) shall be regulated. For this reason, under the provisions of the Regulation, online platforms shall operate in a more transparent and fairer way.
Online intermediation services will be required among others to provide a description of the parameters determining the ranking; set up an internal complaints-handling system and promote out-of-court dispute resolution; ensure effective enforcement of the regulation and to give a right to business users to terminate their contracts if platforms impose new unacceptable terms and conditions.
The Regulation will ensure fairer trading practices between the platforms and the businesses and will contribute to consumer protection as well. The regulation shall be applicable to online platforms from 12 July 2020.