EU adopts rules to make online trading platforms more transparent
Under new EU regulations, technology companies will soon have to make clear how they rank products on their own platform. The EU hopes this will help prevent unfair trading practices.
With the new rules, marketplaces and search engines must show how they rank goods and services on their site so that sellers understand how to improve their visibility. The idea is to be able to help salespeople without manipulating the ranking system to make the company better.
Some marketplaces not only provide a platform, but also provide goods or services on the platform themselves. If you search the Google Play store for a music service, for example, you will also see a service from Google itself, Google Play Music. Under the new rules, providers must make it clear whether and how their platform offers advantages with regard to its own products over those of another. In the Google example, the internet giant should therefore indicate whether and how they favor Play Music over, for example, Spotify. In addition, platform providers must indicate which data they collect, what they do with it and how they share that data with partners.
Furthermore, digital platforms will soon not be able to just remove or suspend a seller’s account for no apparent reason, and the seller must be able to appeal. Also, the platform must reinstate a seller’s account if a suspension is unjustified. The terms and conditions must be readily available and in plain language and when amending the terms, sellers must be given at least fifteen days to comply with them. If the changes to the terms require “complex adjustments” from a seller, they should be given more time to do so.
Platforms should also develop an internal complaints system to help business customers. Platforms with few employees or turnover do not have to comply with this. Also, digital marketplaces should offer business customers more options to solve any problems with mediators. This means that more conflicts can be resolved outside the courtroom, which saves companies a lot of time and money.
Under the new rules, business customers will soon be able to sue platforms if they do not comply with the new legislation. According to the EU, this would remove fears of retaliation and cut legal costs for companies. Member States have the option of giving government agencies enforcement powers, so that companies can approach those agencies.
According to the EU, there are about 7,000 platforms and marketplaces that will be affected by these new rules, including large companies such as Google, Amazon and Apple, to small start-ups. A survey commissioned by the EU indicates that 42 percent of all small and large businesses use online marketplaces. According to a separate EU estimate, nearly half of all European companies trading in such markets experience problems with the platforms.
After the rules are published, companies have a year to comply with them. After that period, the new regulations will come into effect.