Proposal takes aim at the way intermediaries deal with the companies who depend on them
The European Commission is to publish draft regulations on Thursday that would target “harmful” business practices employed by companies such as Google, Apple and Amazon in their relations with the small companies and vendors for whom they act as online intermediaries.
The regulations were initially developed for app stores, but the Commission later expanded them to include other kinds of intermediaries, including search engines and hotel booking services such as Booking.com.
The “platforms to business” proposal is the first time the Commission has sought to regulate large tech companies business operations, having opted for self-regulation in other areas.
The EU’s plans would allow smaller companies to take collective legal action on “online intermediation services” through industry groups or non-profit organisations. Such action is currently only available to consumers in Europe.
Collective lawsuits would only be available if complaints were not resolved in-house or through a mediation system.
The rules take aim at unfair practices such as a change in terms and conditions without explanation or notice, or de-listing or demoting a service in an app store or search engine rankings without a clear justification.
Google and other search engines would be required to provide businesses with a general picture of how their ranking algorithms work and explain whether companies can pay to achieve higher rankings.
“These legal obligations should ensure that the business users of online intermediation services are given appropriate transparency as well as effective redress possibilities throughout the union,” says the proposed text. Several news agencies have reported on the EU’s plans.
The rules would require intermediaries with more than 50 staff to have internal complaint departments. Companies would also be encouraged to hire independent mediators to handle out-of-court settlements and to pay most of the costs for setting up the system.
Tech companies have said the system threatens saddling them with hefty administrative costs and opens them to extended legal action.
“Collective redress could open a floodgate of unnecessary litigation while mechanisms already exist to resolve problems in a much more time- and cost-effective way,” Jakob Kucharczyk of the Computer & Communications Industry Association told the Financial Times.
He said platforms already have many incentives to respond to their business users’ needs and as such the proposed system was “disproportionate”.
The European Commission said in the proposed text it wants to set up a “fair, predictable and ultimately trusted legal environment”.
The plans must be approved by the European Parliament and EU member states before becoming law.
Why not test your knowledge of European tech pioneers and the EU’s contribution to the industry? Try our quiz!