Digital Single Market: EU-wide consultation on online platforms has launched

The EU Commission has opened its online platforms (Digital Single Market) consultation, giving digital businesses three months to shape the agenda on issues ranging from platform transparency, intermediary liability, and free flow of data, to cloud services and the collaborative economy.

On 24 September 2015, the European Commission launched its much-trailed Consultation on Online Platforms, Cloud and Data, Liability of Intermediaries, and the Collaborative Economy.[1] The Consultation is part of the Commission’s assessment of the role of online platforms, promised in its Communication on a Digital Single Market Strategy for Europe (DSM) dated 6 May 2015. The Consultation covers a range of topics, including several controversial issues concerning transparency of online platforms and the proper extent of the hosting defence under the E-Commerce Directive.

The Commission has summarised the scope of the Consultation as “the social and economic role of online platforms, transparency (e.g. in search results), terms of use, ratings and reviews, the use of information by platforms, the relation between platforms and their suppliers, the conditions of switching between comparable services offered by platforms, and the role of online intermediaries, including ways to tackle illegal content on the Internet.” The latter has already generated a substantial level of commentary and debate within the industry.

Many of these issues are core to the way online platforms and intermediaries operate, and so the Commission can expect to receive a large volume of response from parties of all persuasions.

The Commission has published a Background paper which hints at the direction of travel the Commission may be pushing in for certain areas. The Consultation and Background paper can be accessed here.

Interested parties have until around the end of December 2015 to respond (the exact closing date has not yet been published).

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Overview of some of the key discussion areas in the Digital Single Market Consultation

Online Platforms

“Online Platform” is a rather broad term. Although the definition of Online Platforms used in the Consultation is somewhat opaque, it is fleshed out by concrete examples.

These examples highlight that the term is intended to cover search engines, specialised search tools, news aggregators, online market places, audio-visual and music platforms, video sharing platforms, payment systems, social networks, app stores, and collaborative economy platforms.

One of the main topics of enquiry is “transparency” of online platforms. For example, whether there ought to be more transparency in relation to:

• information about sellers
• how responses to search results are presented
• terms of use (ease of understanding)
• ‘reputation systems’ (e.g. reliability of ratings, reviews, certifications, trustmarks)
• the collection and use of personal data, and
• pricing

The Consultation also asks about relations between platforms and suppliers/traders/application developers, or holders of rights in digital content.

For example, digital content rights holders are asked if they have ever faced a refusal by an online platform to take a licence, or a willingness to take one only on terms the rights holders consider unfair. In this context, the Consultation refers to “online platforms such as a video sharing website or a content aggregator“, and in one question asks specifically about whether the hosting defence is given as a basis for such practices.

Intermediary Liability

This section opens with a question bound to prompt charged responses from certain stakeholders: “Have you encountered situations suggesting that the liability regime introduced in Section IV of the E-commerce Directive (art. 12-15) has proven not fit for purpose or has negatively affected market level playing field?”

A draft version of the Consultation, which had previously been leaked online, contained a statement that “there could be instances where online service providers engaging directly or indirectly in content distribution try to overly rely on the limitations of liability and claim that they are mere hosting providers.” Interestingly, in the final version, this wording “overly rely” has been removed. However, the overall impression remains that the Commission is actively considering restricting or in some way re-defining the application of the hosting defence.

One of the most controversial topics addressed in the Consultation is whether stakeholders see “a need to impose specific duties of care for certain categories of illegal content“. This ‘duty of care’ question had been foreshadowed in the Commission’s DSM Communication earlier this year. The Background paper frames the issue as whether to require intermediaries to exercise greater responsibility and due diligence in the way they manage their networks and systems.

The approach taken to notice and action procedures is also under scrutiny in the Consultation. For example, respondents are asked whether different categories of illegal content require different policy approaches as regards notice and action procedures, and in particular different requirements as regards the content of the notice.

Another interesting question is whether stakeholders consider further categories of intermediary should be established, beyond caching/mere conduit/hosting, specifically to cover e.g. search engines or linking services.

Cloud and Data

This section relates to the free movement of data in the EU, in particular the free flow of non-personal data which the Commission considers is being hampered by legal and technical barriers. One of the initiatives outlined in the DSM Communication in May was a European ‘Free flow of data’. Another was a ‘European Cloud initiative’, which aims to “create trust in cloud computing, including cloud services certification, balanced and clear contracts, switching of cloud services providers and a research open science cloud“.

Against this background, the Consultation contains questions about data location restrictions, data access and transfer, data markets, access to open data, access and re-use of (non personal) scientific data, liability in relation to the free flow of data and the internet of things, open service platforms, personal data management systems and the European Cloud Initiative.

Collaborative Economy

The Commission’s aim in this section is to try to understand “whether EU law is fit to support this new phenomenon and whether existing policy is sufficient to let it develop and grow further“. Earlier in the Consultation, the Commission gives the following as examples of collaborative economy platforms: Airbnb, Uber, TaskRabbit, and BlaBlaCar.

The topic is one which has already occupied the minds of regulators in various EU Member States, and in the case of Uber is the subject of a pending CJEU reference.

The many and wide-ranging questions ask about, for example, the risks and challenges associated with the growth of the collaborative economy, the obstacles which could hamper its growth and accessibility, the threshold at which a provider should become subject to relevant rules, insurance, ensuring a level playing field between providers in the collaborative and economy and traditional providers, and existing regulatory/authorisation regimes.

[1] “Public consultation on the regulatory environment for platforms, online intermediaries, data and cloud computing and the collaborative economy”