EU Commission launches its platforms (etc.) consultation

What is it?

As part of its Digital Single Market initiative launched on 6 May 2015, the European Commission committed to a “comprehensive assessment on the role of platforms” – wording which was toned down from an earlier leaked version of the document which referred to a comprehensive “investigation” of platforms. The term “platform” was initially left undefined, so it wasn’t clear what types of organisation the Commission had in mind for its assessment. The “platforms (etc.)” consultation was launched on 24 September 2015, but does this give us a clear indication of what the Commission has in store for online platforms, and does it provide clarity as to what constitutes a “platform”?

We refer to this consultation as “platforms (etc.)” because, as the official title indicates, the scope of this consultation is extremely (and to a degree, inexplicably) wide. Its full title is: “Regulatory environment for platforms, online intermediaries, data and cloud computing and the collaborative economy“. It also includes questions about the Internet of Things. Had they wanted to, the Commission could surely have split this into 3 or 4 separate consultations. The consultation can be accessed here.

So what are we to make of the breadth of the consultation? Does it mean that platforms are no longer in the Commission’s crosshairs to the same degree that they were earlier this year? Or is it just a bid to keep the momentum going in multiple areas at the same time? There are currently seven other open consultations on or linked to the Digital Single Market (including geo-blocking, AVMS reform, telecoms reform and SatCab reform) and one, on e-commerce, has closed already. Or could it be that the Commission isn’t confident enough about any of these areas to give them their own consultation?

What does the platforms consultation tell us?

The ambitious scope covers (amongst other things):

1. Platforms: The Commission’s background information indicates it is on a fact-finding mission to enhance its understanding about platforms, suggesting that it is still unsure how to deal with platforms (if at all). The consultation includes questions about:

• The definition of platforms. The Commission asks if you agree with the following definition:
  • ““Online platform” refers to an undertaking operating in two (or multi)-sided markets, which uses the Internet to enable interactions between two or more distinct but interdependent groups of users so as to generate value for at least one of the groups. Certain platforms also qualify as Intermediary service providers.“
  • The Commission gives the following examples of platforms: “general internet search engines (e.g. Google, Bing), specialised search tools (e.g. Google Shopping, Kelkoo, Twenga, Google Local, TripAdvisor, Yelp,), location-based business directories or some maps (e.g. Google or Bing Maps), news aggregators (e.g. Google News), online market places (e.g. Amazon, eBay, Allegro, Booking.com), audio-visual and music platforms (e.g. Deezer, Spotify, Netflix, Canal play, Apple TV), video sharing platforms (e.g. YouTube, Dailymotion), payment systems (e.g. PayPal, Apple Pay), social networks (e.g. Facebook, Linkedin, Twitter, Tuenti), app stores (e.g. Apple App Store, Google Play) or collaborative economy platforms (e.g. AirBnB, Uber, Taskrabbit, Bla-bla car). Internet access providers fall outside the scope of this definition.”
  • The definition of “platform” was always likely to be controversial because it has become a generic term that is applied to a multitude of varied and very different business models. The general consensus is that the definition is correct but that the examples are not. The Commission has been criticized for its inclusion of aggregators/services such as Netflix and Spotify and Deezer which do not connect parties to create a market, but instead are providing a service to consumers. This may be because the Commission does not understand the nuances between services such as Amazon on the one hand and Spotify on the other. However, such is the breadth of the definition that it may be easier to define platforms by what isn’t included.
• Platform regulation? The Commission asks on two occasions (the first when asking how best to address problems encountered by consumers and suppliers with platforms, the second when asking if there is room for improvement in the relations between platforms and suppliers) whether platforms should be regulated through:
  • market dynamics;
  • regulatory measures;
  • self-regulatory measures; or
  • a combination of the above.
• Business practices of platforms and the impact on the counterparty, with a focus on problematic practices e.g. it involves questions about contracting terms such as MFNs, fees, promotion of the platform’s own services and asks loaded questions / gives loaded options such as:
  • “If you are aware of other contractual clauses or experience other potentially problematic practices, please mention them here”; and 
  • “An online platform such as a video sharing website or a content aggregator is willing to enter into a licensing agreement on terms that I consider unfair”;
  • whilst platforms are asked: “How do you ensure that suppliers of your platform are treated fairly”.
• The consultation also asks questions about:
  • the social and economic role of online platforms;
  • transparency (e.g. in search results);
  • whether terms of use are sufficient and easy to understand;
  • accuracy and reliability of ratings and reviews; 
  • the use of information by platforms;
  • the relation between platforms and their suppliers, the conditions of switching between comparable services offered by platforms; and
  • whether platforms should be able to rely on and benefit from the hosting exemption.

2. Intermediaries: The wording around intermediaries is slightly more loaded, suggesting that the Commission has more of an idea about where to focus its attention, i.e.:

• whether the hosting defence under the E-commerce Directive for the transmission, and temporary or permanent storage of infringing information on behalf of third parties, is fit for purpose. They seem to have in their sights services that have evolved since the evolution of the E-Commerce Directive yet which still rely on the hosting defence, such as such as video sharing websites;
• ways to tackle illegal content on the Internet and whether there is a need for new measures, i.e. whether the EU should introduce a harmonized notice and take down procedure; and
• “a duty of care” – whether to require intermediaries to exercise greater responsibility and due diligence in the way they manage their networks and systems – to impose a ‘duty of care’ to detect and prevent certain types of illegal activities.

3. Data and cloud computing: The initiatives are necessarily wide-ranging, covering:

• a free flow of data: The Commission notes that data location restrictions specify a particular, often geographically defined, area where data needs to be collected, processed or stored, hence restricting the cross-border flow of data within the EU. In a move echoing the geo-blocking consultation, the Commission would like to remove “unjustified” restrictions on the location of data for storage or processing purposes;
• a European Cloud with the aim to create trust in cloud computing, including cloud services certification, balanced and clear contracts, switching of cloud services providers and a research open science cloud;
• issues regarding the ownership of and access to data; and
• legal certainty as to the allocation of liability between providers and users (other than personal data related), particularly in light of the roll-out of the Internet of Things.

4. Collaborative economy: The main question is whether EU law is fit to support this new phenomenon and whether existing policy is sufficient to let it develop and grow further, while addressing potential issues that may arise, including public policy objectives. This feels very much like a fact-finding exercise which will act as a precursor to devising a European agenda for the collaborative economy, which will be considered in the context of the Commission’s forthcoming Internal Market Strategy.

What next?

• The answers will feed into a comprehensive assessment on the role of platforms and intermediaries planned for the first part of 2016.
• Information gathered through questions on data and cloud in digital ecosystems will feed into the Commission’s 2016 initiative to tackle restrictions to the free movement of data within the EU and help the Commission formulate its European Cloud initiative.
• The Collaborative economy questions will feed into the Internal Market Strategy for Goods and Services, due in the autumn 2015.

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