Short Reads

European regulatory initiatives for online platforms and search engines

European regulatory initiatives for online platforms and search engin

European regulatory initiatives for online platforms and search engines

24.05.2019 NL law

As part of the digital economy, the rise of online platforms and search engines raises all kinds of legal questions. For example, do bicycle couriers qualify as employees who are entitled to ordinary labour law protections? Or should they be considered self-employed (see our Stibbe website on this issue)? The rise of online platforms also triggers more general legal questions on the relationship between online platforms and their users. Importantly, the European Union is becoming increasingly active in this field.

One of the European Commission's more recent regulatory initiatives concerns the proposal for a Regulation on promoting fairness and transparency for business users of online intermediation services. This Regulation sets out new rules for B2B relations (which sets it apart from recent B2C European regulatory initiatives such as the Directive on contracts for the supply of digital content and digital services and the Directive on contracts for the sale of goods) that apply to the legal relationship between providers of online intermediation services and search engines on the one hand, and their business users on the other hand (see our previous news update on this topic). In addition, this Regulation provides for a mechanism of collective redress and alternative dispute resolution in respect of disputes relating to online intermediation services and the use of search engines. The purpose of the Regulation is to establish a Europe-wide set of targeted rules to ensure a fair, predictable, sustainable and trusted online environment within the internal market by increasing transparency and effective redress possibilities throughout the European Union.

The Regulation will soon be formally adopted, as the European Parliament, Council of the European Union and the European Commission announced in their political agreement on 14 February 2019. As part of this agreement, several amendments were made to the European Commission's initial proposal. The compromise text is laid down in a resolution that was adopted by the European Parliament on 17 April 2019.

In this Stibbe Blog we will set out the most important aspects of this new Regulation and how this Regulation interrelates with parts of existing European law specifically applying to online platforms and search engines.

Scope

While the scope of application is broad, it remains to be seen whether all online platforms will fall within the scope of the Regulation. For instance, work platforms may not be covered if the workers involved cannot be considered business users (e.g. if their work cannot be seen as relating to their trade, business, craft or profession) or if their activities cannot be qualified as online intermediation services.

Requirements for general terms and conditions

The Regulation imposes several requirements on online platforms in relation to their general terms and conditions. For example, the general terms and conditions must set out the grounds to suspend, restrict or terminate the provision of online intermediation services to business users, and must contain information regarding the ownership of intellectual property rights of business users. Furthermore, the Regulation sets out rules regarding changes to a platform's general terms and conditions and the rights of business users in this respect. In addition, the general terms and conditions may generally not be changed retroactively, must describe any ancillary goods and services that are offered to consumers through online platforms and must include a description of the technical and contractual access to information which online platforms maintain after expiry of contracts with business users.

Restriction, suspension and termination of contracts with business users

If an online platform decides to terminate, restrict or suspend the provision of its online intermediation services to business users, it must explain its reasons for doing so before the termination, restriction or suspension takes effect. There are several exceptions to this obligation, for example if an online platform is subject to a legal obligation not to disclose specific reasons for the termination, suspension or restriction of the provision of online intermediation services. Business users must generally be granted the opportunity to clarify facts and circumstances in relation to an intended termination, restriction or suspension. Should a termination, restriction or suspension be revoked, business users must be reinstated by the online platform without undue delay.

Ranking of business users and search results

The general terms and conditions of online intermediation services and the websites of search engines must explain how business users and search results are ranked. Online search engines must offer corporate website users the possibility to inspect any third party notification that affected the ranking of their website. Importantly, online platforms and search engines are not required to disclose algorithms or any other information that may be used by others to deceive consumers or that may lead to any other harm for consumers through the manipulation of search results. The Regulation furthermore explicitly states that these disclosure obligations shall be without prejudice to the Directive on the protection of trade secrets.

Differentiated treatment

Online platforms and search engines must describe any differentiated treatment their platforms or search engines give to goods or services that are offered through these platforms or search engines, especially in relation to access to data, ranking, direct or indirect remuneration or other conditions that are relevant to business users or corporate website users.

Access to data for business users

In their general terms and conditions, online platforms must describe the conditions for technical and contractual access of business users to any personal data or other data from consumers or business users, or data that is generated through services of the online platforms. In connection to this, online platforms must notify their business users about several aspects of the business users' access to data.

Restrictions on offering different conditions through other means

If online platforms restrict the ability of business users to offer goods and services to consumers outside their platforms, these online platforms must explain the grounds for such restrictions in their general terms and conditions. This obligation is without prejudice to any other rules that apply to online platforms in respect of such restrictions (e.g. antitrust rules).

Alternative dispute resolution and collective redress

The Regulation also imposes requirements on online platforms regarding their internal compliant handling systems and mediation, insofar they do not qualify as small enterprises. Moreover, this Regulation allows for representative actions to enhance the protection of business users and corporate website users vis-à-vis online platforms and search engines. Interestingly, the European Commission recently published a proposal for a European mechanism on collective redress which would replace the Directive on injunctions for the protection of consumers' interests. Contrary to the Regulation, this new Directive allows for representative actions for damages in relation to infringements of specifically designated European consumer protections laws (see our earlier article on this Directive).

Other European regulatory initiatives for online platforms and search engines

By setting out new rules for online platforms and search engines, the Regulation complements existing laws for online platforms and search engines, such as the Directive on electronic commerce that includes information obligations, digital contract rules and conditions for civil liability with respect to (certain) providers of digital services which are normally provided for remuneration, at a distance and at the individual request of a recipient of these services.

In addition to the Regulation, the European Commission has published a proposal for a Directive on better enforcement and modernisation of EU consumer protection. Amongst other things, this Directive aims to prohibit the use of paid placements, paid inclusion or promotional editorial content in the media if there is no disclosure of which search results or editorial content are based on paid placement, paid inclusion or any other form of promotion by traders. Furthermore, this proposal would require online trading platforms to provide information to consumers regarding the most important factors that determine the ranking of offers on these platforms, information on the application of EU consumer protection laws and information on the third party that enters into a contract with the consumer.

The European Parliament has signalled its consent by adopting the Directive on 17 April 2019 in its first reading, while at the same time proposing several amendments. Early 2019, the European Commission, Council and European Parliament seem to have reached an agreement on a draft compromise text of this Directive.

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