A ride home, a Thai takeaway, a new padlock for the shed, an app to entertain my toddler -- all goods and services I've purchased on online platforms in the last week without a second thought as to how quick, convenient and inexpensive the transaction was. Platforms like these (in my case, Uber, Deliveroo, Amazon and the App Store) have become an important part of our economy, connecting consumers to millions of businesses. But thanks to that popularity, the relationships these platforms have with both consumers and business users are facing intense and increasing scrutiny from both enforcers (of existing law) and legislators (considering new rules).
With respect to the business-to-platform relationship, significant new legislation was adopted by the European Parliament today (known as the "P2B Regulation"). First introduced by the European Commission last April, it will go into force 12 months after formal approval by the Council and publication in the Official Journal. The P2B Regulation applies to "online intermediation services" and has three main elements:
- Transparency in terms and conditions, particularly surrounding (i) the parameters used to determine ranking in search results, (ii) any preferential treatment a platform gives its own products that compete with business users, and (iii) the economic, commercial or legal grounds for using "most-favoured nation" clauses;
- Effective Redress in the form of an internal complaint handling system and nomination of independent mediators (platforms with less than 50 employees and turnover of less than €50 million are exempt); and
- Ongoing monitoring of the Regulation itself, after 18 months, to ensure it continues to be fit for purpose with the potential for further legislative proposals in the future.
While the drive behind the legislation certainly stems from concerns regarding the role of the largest platforms, the Regulation applies regardless of size. Thus the burden it places on small businesses - depending on how onerously these requirements are ultimately interpreted by national authorities - could chill innovation into new kinds of platforms.
Large platforms may also be concerned that the P2B Regulation gives competition authorities another arrow with which to take aim. Not only will the new transparency rules facilitate competition authorities' ability to monitor the platforms' conduct, it may one day provide grounds for additional enforcement.
Our briefing has more details and analysis.
As the first-ever regulation in the world that addresses the challenges of business relations within the online platform economy, it is an important milestone of the Digital Single Market and lays the ground for future developments.