There is a growing global appetite to tackle the issue of online harms and protecting online consumers and users. But who should bear the responsibility for preventing, policing and removing harmful online content or products? Who decides what is and is not acceptable and how can that be fairly enforced? These are not easy questions. What is clear is that regulation is coming and the responsibilities and liabilities of online marketplaces, platforms and digital content hosts will change.

In this series Kemp Little’s experts look at the problem, current solutions, consultations and recent developments in shaping a safer digital world.

We hope you enjoy this KL Series. Please also join us on 11 June for a webinar covering the EU’s new Digital Service Act and consultation and the UK’s progress in its online harms initiative. 

Plateauing Platforms’ Practices? New Rules for EU Platform to Business Relationships

In a little over a months’ time the first ever rules on online platforms’ trading practices with their business customers will come into effect. The EU Platform to Business Regulation (Regulation 2019/1150) is intended to create a fair, transparent and predictable business environment for businesses and traders when using online platforms and comes into effect on the 12 July 2020.

The Regulation is intended to address certain issues that businesses face when dealing with online platforms and search engines including unexpected changes to terms of use, delisting or suspending accounts without clear reasons, lack of transparency regarding rankings on platforms and “most favoured nation clauses”.

1. Who does it apply to?

The Regulation applies to online platforms and search engines servicing business users in the EU, where those business users offer goods and services to consumers in the EU (even if the platform or search engine itself is based outside the EU). Traders selling online via marketplaces, hotels using booking platforms, or app developers promoting their apps on third party app stores are amongst those who will benefit from the new rules.

Although the Regulation applies to online platforms and search engines only, all providers of digital services should familiarise themselves with the new rules as they may become subject to similar rules in near future under the proposed EU Digital Services Act. The Digital Services Act is intended to build upon the rules introduced by the Regulation and will apply not only to online platforms but to all providers of digital services.

Lastly, as the Regulation comes into force in the UK’s Brexit transition period, the UK has to implement it, regardless of its EU origins and the Regulation will apply to UK-based operators providing online intermediation services to EU-based business users after the transition period.

2. What’s new?

Terms and Conditions

Platforms must ensure that their T&C’s are drafted in plan and intelligible language and include the following information.

IP Rights	·       Information regarding the business user’s ownership and control of their IP rights ·       This should clarify general usage of logos, trademarks and brand names.
Ancillary goods and services	·       A description of any ancillary goods and services that are offered by the platform or third parties ·       Whether or not the business user can offer its own ancillary goods or services.
Restriction, Suspension, and Termination of Services	·       The grounds for decisions to restrict, suspend or terminate the provision of services to business users ·       Information on business user’s right to terminate the contract.
Ranking	·       The main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters. ·       Where ranking is influenced by remuneration, platforms must provide a description of the options available and the effects of remuneration on ranking.
Other Channels	·       Information on the availability of other channels and affiliate programs for the sale of the business user’s goods and services.
Data	·       A description of the scope, nature and conditions of the business users access to and use of certain categories of data. ·       Information as to whether any data is provided to third parties. ·       Unless such data sharing is necessary for the proper functioning of the online services, the platform must also provide information specifying the purpose of such data sharing as well as possibilities for business users to opt out of that data sharing.
Differentiated treatment	·       A description of any advantage the platform gives to its own goods or services over those of business users. ·       That description shall refer to the main economic, commercial, or legal considerations for such differentiated treatment.
Most Favoured Nation provisions	·       Details of any restriction on the ability of its business users to offer same goods/services under more favourable conditions on other platforms and the grounds for such restriction.
Access to business user information on expiry of the contract	·       A description of any access that the platform maintains, after expiry of the contract between the platform and business user, to information that the business user provides or generates in their use of the platforms services.
The next two additional requirements of the Regulation do not apply to small enterprises.
Mediators	·       Identify 2 or more mediators they will engage to resolve disputes.
Complaint-handling System	·       All relevant information relating to the access to and functioning of their internal complaint-handling system.

 

Business User’s Identity

Platforms must ensure that the identity of the business user providing the goods or services on their platform is clearly visible.

Introduction of minimum notice period for changes to Terms and Conditions

The Regulation introduces a minimum notice period of 15 days for any changes to a platform’s T&C’s and a right for business users to terminate the contract if they do not agree to the proposed changes. This change will be especially welcomed by app developers who will now have some time to adapt their apps to changing T&C’s instead of having them removed from app stores.

Any such changes to T&C’s must be notified to the business user on a durable medium and failure to provide enough notice renders the changes null and void. This is a clear example of the Regulation applying principles of consumer law to the interactions of platforms with business users.

Platforms may not impose retroactive changes to T&C’s except when they are required in relation to a legal or regulatory obligation or are beneficial to business users.

The Regulation sets out certain exceptions to the notice period applying including where the change is required to meet a legal or regulatory obligation of the platform.

Restriction, Termination and Suspension of Services

If a platform decides to restrict or suspend the provisions of its services to a business user it must provide the business user with reasons for that decision on a durable medium, prior to or at the time of the restriction or suspension taking effect.

If a platform wishes to terminate its contract with a business user the platform must provide a minimum of 30 days’ notice of termination and the notice must be accompanied by a statement of reasons why the platform is taking such action.

The Regulation sets out certain exceptions to the notice period applying including where the business user has repeatedly infringed the platforms T&C’s.

Internal complaint handling system and mediation

Platforms will have to provide an internal system for handling complaints of business users. The compliant handling systems will be easily accessible and free of charge and shall ensure handling of the compliant within a reasonable time frame.

Platforms must provide details in their T&C’s of at least two mediators that can be used to settle disputes (including disputes that could not be resolved by means of the internal complaints handling system) between the platform and the business user. The platform shall bear a reasonable proportion of the total costs of mediation in each case. Any attempt to reach an agreement through mediation will not affect the parties rights to initiate judicial proceedings at any time before, during or after the mediation process.

These requirements do not apply to small enterprises i.e. an enterprise that has fewer than 50 employees and has either an annual turnover and/or annual balance sheet total no exceeding €10 million.

Obligations imposed on search engines

The Regulation imposes similar transparency obligations on search engines in relation to ranking and differentiated treatment as are imposed on platforms.

Search engines will be required to inform corporate website users of the main parameters determining ranking by providing a publicly available description and that description must be kept up to date. Where ranking is influenced by remuneration, search engines must provide a description of the options available and the effects of remuneration on ranking must be provided.

This obligation is complementary to the New Deal for Consumers, which requires platforms and search engines to also inform consumers about ranking parameters and promoted search results.

If a search engine alters or delists a website on the basis of a third party notification, the affected business user must be offered the chance to inspect that third party notification.

3. Enforcement

Trade bodies and other representative organisations will be able to take action against platforms and search engines for failure to comply with the Regulation.

4. Next steps

Businesses that are caught by the Regulation have until the 12^th of July 2020 to get their house in order. If a business is caught or at least may be caught, it will need to review its processes and procedures and implement any changes necessary to comply with the Regulation. The most immediate action required by platforms will be to update their T&C’s and consider what mediation and complaint handling processes they will put in place.

For more information see our Digital Content & Reputation Risks hub.

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