The role of online platforms in digital transformation: The EU’s experience

Event report

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Ms Katarzyna Lasota Heller (Attorney in Law, Managing Partner, Managing Partner at LEXcellence.swiss) moderated the session and launched the discussion by considering that each one of us has different experiences with e-commerce depending on whether we are consumers, entrepreneurs, advertisers, content producers, or platform managers. The discussion focused on the Regulation of the European Parliament and of the Council on promoting fairness and transparency for business users of online intermediation services addressing the business-to-platform (‘b2p or p2b’) relationship.

Mr Werner Stengg (Head of Unit at the European Commission, European Union (EU)) considered that the EU regulation does not simply tackle the generalities of e-commerce but specifically addresses the platform-based economy. He noted the positive impact of e-commerce platforms on the ‘centralisation effect’ (i.e., the collection of scattered business supplies  and information online) for a more effective user experience, matching the vendor supply with consumer demand. He further explained that the regulation has to be contextualised in a European legal framework composed of data and consumer protection laws, digital taxation, and content regulations. He summarised the reasons motivating the regulation: the imbalance generated by the ‘network effect’ of a platform-based economy; increased clarity and transparency about the rules and procedures put into place by the platform; more predictability on how a platform uses the data collected and how it develops internal parameters; and facilitation of communication between the business and the platform in case of disputes or suspension of a business account.

Mr Oliver Prothmann (President & Commercial Judge, German Federal Association of Online Trade / Bundesverband Onlinehandel e.V. (BVOH)) invited the audience to think of platforms as marketplaces. A BVOH study identified 900 marketplaces around the world with Amazon, Alibaba, Ebay, Naspers, and Craigslist being the main operators. He also highlighted that most online marketplaces are composed of SMEs, as big companies have their own websites. He clarified that we should speak of the dependency between the businesses and online platforms rather than ‘relationship’ because businesses are dependent on their platforms: if any steps in the value chain of an e-commerce company are compromised (e.g. the payment system is temporarily closed or the business’s account is suspended) the life of that enterprise is at stake. He praised the regulation (also referred to as ‘business-to-platform or b2p regulation’) as ensuring the continuity of communication in case of problems between the platform and the business (e.g. in the case of account suspension).

Ms Léa Auffret (Senior Trade Policy Officer & Trade Team Leader, BEUC) highlighted that the b2p regulation does not directly address consumers. If, on the one hand, the provisions foster a fairer marketplace for businesses, on the other hand, the question of how these beneficial effects will be transferred to the consumers remains open. She added that compared to other jurisdictions (e.g. the USA), EU consumers are more protected by the existing data, consumer protection, and competition regulations. She concluded her presentation by suggesting improvements to the existing European regulatory framework. She urged the development of appropriate measures addressing discriminatory practices by the platforms and personal e-commerce transactions that could slip through the traditional customs controls. Auffret encouraged stronger regulation on this matter to augment current voluntary agreements between platforms and states. Finally, she pushed for the introduction of restrictions on how platforms manage consumers data and for a bolder approach towards device neutrality concluding ‘how is it possible that in 2019 there are still applications that cannot be installed on devices or others that it is not possible to delete?’

Mr Jakub Kucharczyk (Vice President, Competition & EU Regulatory Policy, Computer and Communications Industry Association (CCIA)) underlined the particular character of the b2p regulation: compared to data and consumer protection rules which apply to all domains of commerce (mostly offline), this regulation specifically targets the link between platforms and businesses online. He specified that this regulation is principled-based: it encourages platforms to have a transparent and clear relationship with businesses rather than strictly regulating platforms behaviour. Given the existing diversity among platforms (from Uber to Booking.com) and the many constituencies (e.g. consumers, businesses, advertisers, content providers) towards which each platform acts as a moderator, an overly prescriptive regulation would shift the existing balance more in favour or against some of the actors.

By Marco Lotti