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Online platforms - no compelling case for future regulation

In September 2015, the EU Commission, as part of its Digital Single Market Strategy for Europe, undertook an in-depth analysis of the role of online platforms in the economy. It was investigating how the largest online platforms use their market power and whether the current regulatory environment for online platforms is still "fit for purpose". A communication announcing the results of the Commission's findings are eagerly awaited. 

On 25 April 2016, a draft version of the communication was unofficially released. Despite fears, the draft version makes it clear that, at this stage, the Commission believes there is no compelling case for introducing new regulations in the field of online platforms.  

Instead of whole-scale regulation, the Commission proposes a self-regulatory approach based on the following four principles:

1. Level playing field for comparable services. Where the same activities are supplied by different actors, reforms will be introduced to ensure that the activities are regulated in the same way, so as to avoid market distortion. In particular, with respect to the telecommunications sector, the Commission will announce a targeted mix of deregulation of current telecoms–specific rules. It will also announce the introduction of a more focussed set of communication-specific rules that will level the playing field.

2. Online platforms to act responsibly in the fight against illegal and harmful content. The Commission will ensure that video-sharing platforms implement technical measures to protect minors from harmful content. It will also introduce a new copyright package in Autumn 2016 to assist with the fight against illegal distribution of content by online platforms. Instead of regulatory reform, the Commission will encourage co-ordinated EU-wide self-regulatory efforts by online platforms and will assist in the creation of self-regulatory measures by providing guidance and convening multi-stakeholder forums.

3. Transparency and fairness in relation to data collection and access to user information. The Commission believes there should be a move away from the multiple user-name and password approach to a more secure single electronic ID approach, using government issued identification documentation.  

On the issue of tackling fake or misleading online reviews, the Commission calls upon the industry to step-up self-regulatory efforts to prevent the posting of fake or misleading reviews.

With respect to abusive practices in B2B relations, the Commission offers no immediate proposals for action against such abuse. Instead, it proposes to gather additional information over the next six months to determine whether more action is needed beyond self and co-regulatory efforts.

4. Open, fair and non-discriminatory markets with no restrictions to access or transfer of data between platforms. The Commission proposes to guarantee the full implementation of the new General Data Protection Regulation which will safeguard the right of individuals to switch between different online platforms. In addition, the Commission proposes to offer liability exemptions and priority in funding to online platforms that agree to adopt a voluntary code of conduct and that agree to remain open.

The draft communication demonstrates a deep understanding that the issues concerning online platforms are too complex to be solved by broad strokes legislation and that additional regulation would have an unintentional damaging effect on innovation, competition and economic growth of the European digital industries.

What does this mean?

For those in the telecommunications sector, the content of the communication may be positive, with targeted deregulation of existing telecoms rules as the playing field is gradually levelled. For those who are more entrepreneurial or European-based and want to break into the online platform sphere as a start-up, the content of the communication is exciting. They will welcome the Commission's launch of the Start-Up Europe Initiative, intended to inspire, advise and fund information communication technology start-ups and the move to mobilise a package of €50 billion of public and private investment to upgrade Europe's digital innovation capabilities. From this standpoint the Commission is ushering in what seems to be nothing short of a big data gold rush in Europe. For consumers, the Commission's proposal to continue to champion the fight against harmful content may be encouraging as are its proposals to prevent abuse of user information and to safeguard the right of consumers to switch between online platforms. But, until concrete proposals are released, the implications for consumers remain to be seen.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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