The European Commission has proposed a series of new standards to promote transparency and fairness on online platforms.
As well as increasing transparency and fairness on online platforms, the new rules will seek to level the playing field for small businesses in the digital sector, and provide them with a safety net by creating a fair, transparent and predictable business environment.
The announcement follows a declaration by European Commission President Jean-Claude Juncker in September of last year, in which he stated his aim to improve the long term functioning of the Digital Single Market. In a recent Eurobarometer survey, some 42% of small and medium companies said they sell through online marketplaces.
However, the results of this survey also revealed that almost half of European companies operating online have experienced problems, particularly in terms of contractual relations, which the study estimates contributes to a direct loss of €1.27-2.35bn in sales. The new rules to improve transparency and fairness on online platforms seeks to address these concerns and avoid further financial losses.
What does the new legislation include?
One of the areas which is addressed by the new rules is search engine results. Many smaller businesses, in sectors from hotels to app development, rely heavily on search engines to draw traffic to their websites. The commission’s regulations will ensure that search engines must detail the criteria which determine how goods and services are ranked, to improve transparency.
The new rules will also ensure that online platforms and intermediation service providers will have to set out terms and conditions in advances, and nominate independent mediators who can facilitate out-of-court dispute resolution, in the event of contractual issues.
How has the European Commission reacted?
European Commissioner for the Digital Economy, Mariya Gabriel, said that it was vital to the success of European businesses that search engines and other online platforms are transparent about how they operate, to allow these businesses to take full advantage of opportunities.
She explained: “Platforms and search engines are important channels for European businesses to reach consumers, but we must make sure they are not abusing their power, and thus bringing harm their business users. We are taking a very important step with clear rules on transparency, efficient dispute settlement and the launch of an observatory to analyse online platforms’ practices in greater detail. Ensuring that platforms and search engines treat other businesses fairly is critical including for promoting trust in online platform environment in the EU.”
