EU Online Platform Bill

Search engines, app stores and other online platforms are facing new transparency obligations in relation to their contracts with other businesses in a new EU draft Bill proposed to be introduced next year.

The background 

Whilst acknowledging that online platforms are an important part of a thriving digital economy,  the European Commission wants to ensure that platforms operate properly and that illegal  content is removed. 

In May 2016, the European Commission published the Communication on Online Platforms,  which identified the main areas where further attention is needed to ensure a “trusting, lawful  and innovation-driven ecosystem” around online platforms. The guiding policy principles  pursued by the Commission are: 

• a level playing field for comparable digital services 
• ensuring that online platforms behave responsibly to protect core values 
• fostering trust, transparency and ensuring fairness 
• keeping markets open and non-discriminatory to foster a data-driven economy.

The Commission went on to state that “there is widespread concern that some platforms may  favour their own products or services, otherwise discriminate between different suppliers and  sellers and restrict access to, and the use of, personal and non-personal data, including that  which is directly generated by a company’s activities on the platforms”. The Commission  continued that “some online platforms remove products from search results without due notice  or without any effective possibility to contest the platform’s decision”. 

The Commission has set out specific actions in its 2018 work program, to address the issues  of unfair contractual clauses and trading practices identified in platform-to business  relationships, exploring dispute resolution, fair practices criteria and transparency. The  intention of the actions is to underpin and move forward the EU executive’s flagship Digital  Single Market strategy which aims to “open up digital opportunities for people and business  and enhance Europe’s position as a world leader in the digital economy”. 

The EU believes that the transparency obligation will address the issues that companies  experience when ascertaining how to gain prominence on certain search engine systems. It is  also expected that the draft bill will look at other sectors, such as the ranking of online retailers  on Amazon and eBay, hotels on Booking.com and apps on the Google Play store. The  proposal also seeks to establish a dispute resolution procedure for companies who wish to  contest their rankings and ratings on such platforms. 

Why is this important? 

The proposed Bill marks a shift in previous Commission communications which suggested  there would be no sweeping legislation in this area, and has drawn criticism from associations  representing online platforms like Amazon, Airbnb and Google. 

The EU’s steps seem to be partly in response to a 2016 Eurobarometer survey in which 66%  of small and medium-sized businesses responded that their sales are significantly affected by  how platforms position them in search results. More worrying still, there appears to have been  hints that transparency measures may extend to platforms’ algorithms but this has not been  confirmed. This is one space which definitely needs watching as the Commission continues  its march towards a more level playing field as part of its Digital Single Market strategy.