The EU have reached a political deal on the first-ever rules aimed at creating a fair, transparent and predictable business environment for businesses and traders when using online platforms.
Traders selling online via marketplaces, hotels using booking platforms, or app developers are amongst those who will benefit from the new rules agreed today. The new Regulation will create a more predictable and transparent trading environment online, and will offer new possibilities for resolving disputes and complaints.
As part of the Digital Single Market strategy, the new rules will apply to the entire online platform economy - approximately 7000 online platforms or market places operating in the EU, –which include world giants as well as very small start- ups, but having often an important bargaining power vis a vis business users. Certain provisions will also apply to search engines, notably the ones concerning ranking transparency.
Vice-President for the Digital Single Market Andrus Ansip said: “Today's agreement marks an important milestone of the Digital Single Market that will benefit millions of European companies relying on digital platforms to reach their customers. Our target is to outlaw some of the most unfair practices and create a benchmark for transparency, at the same time safeguarding the great advantages of online platforms both for consumers and for businesses.”
Commissioner for Internal Market, Industry, Entrepreneurship, and SMEs, Elżbieta Bieńkowska, stated: “Our new rules are especially designed with the millions of SMEs in mind, which constitute the economic backbone of the EU. Many of them do not have the bargaining muscle to enter into a dispute with a big platform, but with these new rules they have a new safety net and will no longer worry about being randomly kicked off a platform, or intransparent ranking in search results.”
Commissioner for the Digital Economy and Society, Mariya Gabriel, added: “These are the first rules of this kind anywhere in the world, and they strike the right balance between stimulating innovation while protecting our European values. They will improve the relationship between businesses and platforms, making it fairer and more transparent, and ultimately leading to great advantages for the consumers. We will closely monitor the evolution of this field, not least through our Online Platform Observatory.”
According to a Eurobarometer survey almost half (42%) of small and medium companies in the EU said they use online marketplaces to sell their products and services. An impact assessment carried out by the Commission ahead of its proposals showed that nearly 50% of European businesses operating on platforms experience problems. Some 38% of problems regarding contractual relations remain unsolved, and 26% are solved but with difficulties; around €1.27-2.35 billion are lost directly in sales as a result.
Small businesses will particularly benefit immediately from:
Today sellers are often left stranded with no ways to appeal or resolve complaints when problems arise. This will change with the new rules.
The new rules will apply 12 months after its adoption and publication, and will be subject to review within 18 months thereafter, in order to ensure that they keep pace with the rapidly developing market. The EU has also set up a dedicated Online Platform Observatory to monitor the evolution of the market and the effective implementation of the rules.
Platforms offer a wide range of opportunities for fast and efficient access to international consumer markets, which is why they have become the go-to place for millions of successful businesses. However, certain structural issues lead to unfair trading practices between businesses that have come to depend on online platforms to reach their customers and undermine the innovation potential of platforms.
The Commission's Communication on Online Platforms of May 2016 identified certain areas where more efforts are needed to ensure a trusting, lawful and innovation-driven ecosystem in the EU. As a result in April 2018 theCommission made a proposal for an EU Regulation on fairness and transparency in online platform trading as well as for the creation of anObservatory on the online platform economy. This initiative delivers on the commitment made in President Juncker's 2017 State of the Union address to safeguard a fair, predictable, sustainable and trusted business environment in the online economy.
The new rules are underpinned by an impact assessment that incorporates evidence and stakeholders' views collected during a two-year fact-finding exercise.
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