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DSM Watch: What does the EU Commission really want to know about your online business?

Alastair Shaw

Alastair Shaw,

London

Lea Kaase

03 November 2015
In May the announcement of the European Commission's Digital Single Market (DSM) strategy received much attention. Our DSM Watch team is a multi-jurisdiction, cross-practice group working together to keep you informed as the initiatives under the DSM strategy roll out.
DSM Watch: What does the EU Commission really want to know about your online business?

In this post we look at the Commission's current consultation on platforms, online intermediaries, data, cloud computing and the collaborative economy. It's open until until 30th December 2015, so there's plenty of time to have your say.

Background

For an overview of the DSM strategy take a look at our earlier blogs for the whole and each of its three "pillars" here, here and here.

As part of the second pillar "Creating the right conditions for digital networks and services to flourish" the EU politicians aim at analysing the role of online platforms. In this consultation the Commission uses this (very broad) definition of online platform:

"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."

You can immediately see that this could cover app stores as well as search engines, online market places, video sharing platforms and even some social networks. Before proposing any legislative drafts, the Commission therefore launched the consultation to analyse their role and other associated topics.

Key Issues of the Consultation

The consultation is divided into four parts:

1. Online Platforms

The first part deals with the social and economic role of online platforms. The questions are mainly focussing on two topics: (a) the lack of transparency and (b) the relation between platforms and suppliers/traders. The Commission would like to know if the information provided by platforms is sufficient for consumers as well as for suppliers. It explicitly mentions e.g. information on the collecting/the use of personal and non-personal data and information on the actual supplier of an offer. The questions on the relation between platforms and suppliers deal with the terms and conditions or license agreements when it comes to copyright protected content and whether they can be considered fair. A specific example the Commission asks about is the "parity clause" which obliges suppliers to maintain parity with their best offer in other sales channels regarding the price, availability and other conditions.

2. Tackling Illegal Content online and the Liability of Online Intermediaries

In the context of intermediaries, the Commission wants to discuss whether the provisions regarding the liability of intermediaries of the E-Commerce Directive 2001/31 are still sufficient. Articles 12 – 15 of that Directive categorise three types of intermediaries: mere conduit, caching and hosting. On the one side, the consultation focuses on the question whether there should be new categories in the light of new business models that do not really fit the current categories. On the other side, the questions refer to the so-called "notice and take down" obligations on intermediaries and whether there should be an increased burden on them, in particular when it comes to illegal content.

3. Data and Cloud in Digital Ecosystems

This part deals with several topics of non-personal data in connection with the internet. One element of the strategy is the European Free Flow of Data Initiative and the question is whether the current restrictions (technical and legislative barriers) on the free movement of data that is non-personal are justified. This initiative will become relevant for, amongst others, companies dealing with big data or cloud services. Also, areas like access to "Open Data" and "Scientific Data" are included in the consultation. In the context of the European Cloud Initiative, the Commission would like to know how fair the existing contractual practices really are.

4. The Collaborative Economy

According to the Commission, the so-called "collaborative economy links individuals and/or legal persons through online platforms (collaborative economy platforms) allowing them to provide services and/or exchange assets, resources, time, skills, or capital, sometimes for a temporary period and without transferring ownership rights". Since the collaborative economy, also known as "sharing economy", has been growing strongly, the Commission seeks to know more about the risks and challenges of the new business models driving it.

What´s up next?

One question is raised several times in the consultation: whether solutions to any problems that exist should be resolved by market dynamics or by regulation. So far, the Commission has not announced any specific legislative changes in the field of online platforms. It is likely that the review of the E-Commerce directive which has been scheduled for 2016 will include many of the points raised by the consultation. This is particularly demonstrated by the types of questions in the consultation.

Any new regulatory solution would have to satisfy the European Commission's newly-updated "Better Regulation Guidelines", which emphasize that regulatory solutions must be preceded by a cost-benefit analysis, including a clear definition of the "market failure" that regulation is intended to cure.

Alastair Shaw

Alastair Shaw,

London

Lea Kaase

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