DSM Watch - Platforms: EU Commission issues a Recommendation and a draft Regulation as the DSM approach towards ISPs takes (an irregular) shape

Hogan Lovells

Hogan Lovells

In a nutshell: As part of the DSM strategy, the Commission has recently published a series of new proposals impacting platforms and ISPs, including a Recommendation on tackling illegal content online and a draft Regulation on promoting fairness and transparency for business users of e-commerce platforms. In these new documents, the Commission addresses consumer protection, fair competition and notice-and-take-down obligations. We highlight the main possible changes below.

Last Thursday (26 April 2018) the EU Commission issued a draft “Regulation on promoting fairness and transparency for business users of online intermediation services”. It is the latest initiative in a comprehensive reform addressing platforms under the Commission’s DSM Strategy. That started with the 2016 Communication on “Online Platforms and the Digital Single Market Opportunities and Challenges for Europe” and recently led to the adoption of a number of other pieces of (more-or-less soft) legislation such as two Directive proposals, a Communication under the “New Deal for Consumers” umbrella and a Recommendation “on measures to effectively tackle illegal content online” which the Commission issued in March.

The proposed Regulation is built around a number of principles which are already present in the other texts mentioned above and which constitute the leitmotivs of the overall DSM strategy on platforms. It relates to business users of “online intermediation services and online search engines”.

As to the scope of application, both the Regulation and the Recommendation on tackling illegal content would get rid of the (EU) Country-of-origin principle in the E-Commerce Directive to embrace a more comprehensive Country-of-Destination approach. Both aim to regulate any provider which offers its services to an EU audience, whether or not the platform is established in the EU.

Secondly, both the Recommendation and the Regulation are very clear in re-stating that the E-Commerce Directive’s safe harbour regime for ISP’s is key to the development of the information society and any future measure adopted under those laws should still comply with it. Consistently with the Community acquis and with the rules governing ISPs in democratic Countries, those initiatives distance themselves from the current push for monitoring obligations that the same Commission has proposed in the context of the draft Copyright Directive.

The Recommendation, the New Deal for Consumers initiative, and the proposed Regulation stress the importance of clarity and transparency of platforms’ terms and conditions and termination/suspension/take-down procedures. Thus, under the Regulation, Courts could declare clauses of a platform’s T&Cs as “non-binding” if they are not sufficiently clear and specific in setting out when the platform can suspend or terminate its service to a business user and under the Recommendation, hosting service providers should be encouraged to publish explanations of their take down policies and reports containing information on the amount and type of content taken down and the time taken.

Both the New Deal for Consumers and the Regulation emphasise that platforms’ T&Cs should reveal “the main parameters” determining rankings and natural search results, making clear when and how results’ are sponsored and avoiding preference being given to goods or services offered by the platform itself and by other businesses using the platform. The extent of the information required to be given would be limited and would not cover ISPs’ algorithms — platforms will “not be required to disclose any trade secrets as defined in Article 2(1) of Directive (EU) 2016/943” (the Trade Secrets Directive).

Under the Recommendation and the proposed Regulation (as well as within the likely-next AVMS Directive), platforms also provide for systems to handle complaints connected to the services they offer. In case of requests to take down content, to keep them online, or to enforce T&Cs, the general idea is that the ISP should create some sort of internal alternative dispute resolution mechanism where all the parties involved have some right to complain and defend themselves. Interestingly, both the Recommendation and the proposed Regulation stress that platforms may rely upon third parties’ mediators and out-of-court dispute settlement mechanisms to comply with this requirement.

In fields like consumer protection, fair competition, general take-down, and AVMS (apparently, the trilogue have made ground-breaking steps only last week), the EU Commission, as well as the Council and Parliament seem to have been adopting a rather balanced approach, proposing the introduction of new obligations while acknowledging the peculiarities of ISP business. One wonders why the copyright package should be a completely different story.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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