European Union Approves New Regulation on Online Platforms
30 June 2019
Technology & Regulation in the Spotlight
The Council of the European Union approved a new Regulation (Regulation (EU) 2019/1150; “Regulation”) on promoting fairness and transparency of online platforms, to ensure that businesses using online intermediation services and general online search engines have greater legal certainty and clarity with respect to the rules governing their relationships with these platforms and how to resolve potential disputes.
The Regulation applies to online platform intermediaries and general online search engines, such as e-commerce market places, app stores, social media for business, and price comparison tools, which provide their services to businesses established in the EU and offer goods or services to consumers located in the EU, irrespective of the place of establishment or residence of the providers of those services.
Recognizing the asymmetry of power existing between online platforms and business users, the Regulation establishes a series of legally binding transparency and redress obligations. One major obligation in that sense is for platforms to make available, publicly and at all times, terms and conditions that are easily understood by an average business user and that presents main topics, such as commercial conditions for the use, termination and suspension of services, in a clear and unambiguous language.
Such terms and conditions can be amended only with 15 days’ prior notice and must give the platform’s business users a further 15 days to terminate the contract if they do not accept the proposed amendments. If the platform operator wants to terminate, it must provide a statement of reasons on a durable medium and give at least 30 days’ prior notice. In practice, this also means that platforms will have to provide business users with the reasons for restricting or suspending individual products/services.
Another main obligation is for online services to clearly describe the scope, nature and conditions of their access to and use of certain categories of data, including personal data. The description should be proportionate and might refer to general access conditions, with clear information regarding the transfer of personal data to third parties.
For search engines, the new Regulation requires disclosure about how they determine rankings, by setting out in their terms and conditions the main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters, including the influence of any direct or indirect remuneration.
Finally, the Regulation contains a full range of remedies and redress mechanisms, by requiring platform operators to provide for an internal complaint-handling system that is easily accessible and free of charge. In addition, platforms should refer businesses to a list of impartial and independent mediators. In this sense, it encourages providers of online intermediation services to individually or jointly set up one or more independent mediator organizations to facilitate the settlement, out of court, of disputes that arise in the course of services.
The Regulation will enter into effect on July 2020, without the need for any further implementation by EU Member States.
We would be happy to provide further guidance on how this new Regulation might impact your activities.
Feel free to contact us with any further question or comments regarding the update and subjects detailed above.
Ariel Yosefi, Partner
Co-Head | Technology & Regulation Department
Herzog Fox & Neeman