One step further in the Digital Reform: The EU Commission has just published a Q&A on the implementation of the P2B Regulation
The first wave of EU legislation regarding the internet emerged twenty years ago. Now the Commission has started the revision of these instruments to adapt them to our rapidly changing digital society. On 17 April 2019, the European Parliament adopted the Digital Single Market directive containing in its controversial Article 17 the obligation for online content sharing service providers to filter copyright-protected content. More recently, on 12 July 2020, Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services (Platform to Business Regulation or P2B Regulation) became applicable. In this regard, the EU Commission adopted on 10 July 2020 a set of guidance / Q&A to help traders, online platforms and search engines get the most out of the P2B Regulation. In this e-zine, we will briefly explain the P2B Regulation and its impact for traders active on online platforms.
Scope of the P2B Regulation
The P2B Regulation aims to remedy the imbalance that exists between online platform providers and professionals or businesses that are active on such platforms and seek to reach consumers.
In practice, the P2B Regulation will apply to online marketplaces, social media providers, app stores and search engines. The P2B Regulation indeed contains provisions that are applicable to online search engines relating to search neutrality.
In principle, the P2B Regulation does not cover:
- peer-to-peer online intermediation services without the presence of business users, pure business-to-business online intermediation services which are not offered to consumers, online advertising tools and online advertising exchanges which are not provided with the aim of facilitating the initiation of direct transactions and which do not involve a contractual relationship with consumers. For the same reason, search engine optimization is excluded for the P2B Regulation’s scope; and
- online payment services.
The P2B Regulation applies to business users that are:
- established in the EU; and
- offer products or services to consumers located in the EU.
How to tackle the imbalance? Be transparent and fair
The P2B Regulation aims to correct this imbalance by introducing the obligation for online platform providers to be transparent in their terms and conditions and by banning some unfair practices.
Terms and conditions should be easily accessible at all stages even before the conclusion of the contract to businesses. They have to be written in plain and intelligible language.
Changes made to the terms and conditions must be notified at least fifteen (15) days before these changes enter into force. If the business does not agree with these changes, it has the right to terminate the contract at the moment of the change. An editorial change of the terms and conditions will not be considered as a change though.
Furthermore, online platform providers must be transparent about the termination, restriction or suspension of their services to businesses, provide an internal complaint-handling process and provide a thirty (30) day notice period before ending the contract.
The ranking of goods on platforms has an important impact on the business’ commercial success. Therefore, online platform providers must also be transparent on the main parameters that determine these rankings. This information will help businesses to improve the presentation of their products and improve thus their ranking. Online platform providers must also communicate whether it is possible to change this ranking against remuneration.
Finally, online platform providers must disclose if they favor their own products on the platform over the products of the other businesses that are active on the platform.
Terms and conditions that do not meet these conditions will be null and void.
Given the long list of new obligations, the EU Commission decided to publish a first Q&A in 2019 that has now been updated in order to create a checklist for online platforms and search engines when implementing the new requirements provided by the P2B Regulation.
Conclusion? Review your terms and conditions
The P2B Regulation amends the existing legal framework to remedy the imbalance between large and powerful online platforms and the businesses that are active on these platforms. We are of course at the disposal of online platforms and search engines to assist them drafting or reviewing their terms and conditions in order to be compliant with the P2B Regulation.
Moreover, we will also follow the new EU developments in this matter. Indeed, under the Digital Services Act package the EU Commission will now continue to amend the existing framework applicable to online services.
In this respect, the EU Commission would propose clear rules framing the responsibilities of digital services to address the risks faced by their users and to protect their rights. The legal obligations would ensure cooperation for the supervision of platforms and guarantee effective enforcement. Second, the Digital Services Act package would propose ex ante rules covering large online platforms acting as gatekeepers, which now set the rules of the game for their users and their competitors.