03 June 2021

by Richard Kemp

Regulating Online Intermediation Services in the UK – a Brief Overview

In this short piece, we overview the new ‘platform to business’ rules that came into effect on 12 July 2020. This is the first of three related pieces prepared for our Digital Commerce Webinar on 28 April 2021. Together, they show the ever more closely converging nature of regulating digital commerce, telecommunications and the internet. The other two pieces are on video-sharing platforms and ‘over the top’ services.

The Online Intermediation Services Regulation (2019/1150), commonly called the ‘Platform to Business’ or ‘P2B’ Regulation) came into effect on 12 July 2020 and represents the first time that the EU has specifically sought to comprehensively regulate online platforms, search engines and corporate websites. This note is a brief overview of the main provisions of the P2B Regulation.

Online intermediation services (‘OISs’) are defined at Art. 1(2) P2B Regulation. An OIS will be covered if:

a) it is an Information Society Service (see point 5 below);

b) it allows:

“business users[1] to offer goods or services to consumers, with a view to facilitating the initiating of direct transactions between those business users and consumers, irrespective of where those transactions are ultimately concluded”; and

c) it is provided to business users on the basis of contractual relationships between the ISS provider and business users offering goods or services to consumers.

Online search engines (‘OSEs’) are defined at Art 1(5) P2B Regulation as:

“a digital service that allows users to input queries in order to perform searches of, in principle, all websites, or all websites in a particular language, on the basis of a query on any subject in the form of a keyword, voice request, phrase or other input, and returns results in any format in which information related to the requested content can be found.”

The P2B Regulation also covers and ‘corporate website users’ (‘CWUs’), defined at Art. 1(7) as:

“any natural or legal person which uses an online interface, meaning any software, including a website or a part thereof and applications, including mobile applications, to offer goods or services to consumers for purposes relating to its trade, business, craft or profession.”

The key definition for digital commerce regulation in the UK and EU is that of ‘information society service’ (‘ISS’) under the EC’s E-Commerce Directive 2000/31 of 8 June 2000 (the ‘E-CD’)[2]. ISS are summarised in the E-CD as any service (i) normally provided for a remuneration (which is construed broadly), (ii) at a distance, (iii) by means of electronic equipment for the processing … and storage of data, and (iv) at the individual request of a recipient of the service”.[3]

The P2B Regulation Recital 11 gives as examples of covered OIS:

“online e-commerce marketplaces, including collaborative ones on which business users are active, online software applications services, such as application stores, and online social media services … It should also not be relevant whether those transactions between business users and consumers involve any monetary payment or whether they are concluded in part offline.”

Recital 11 also states that the following are not covered:

  1. non-business user peer-to-peer services without the presence of business users;
  2. pure B2B services which are not offered to consumers;
  3. non-transactional advertising services;
  4. SEO services;
  5. ad-blocker services;
  6. “technological functionalities and interfaces that merely connect hardware and applications should not be covered by this Regulation”. However, where “such functionalities or interfaces can be directly connected or ancillary to certain [OIS] … the relevant [OIS] providers should be subject to transparency requirements related to differentiated treatment based on these functionalities and interfaces”; and
  7. online payment services as “inherently auxiliary to the transaction for the supply of goods and services to the consumers concerned.”

Where a business user offers goods or services to its consumer customers through the platform’s OIS, then the requirements of the P2B Regulation will apply to the contractual terms and conditions between the platform provider and its business users that are ‘unilaterally determined’ by the platform (OIS) provider. Recital 14 adds colour to what is meant by ‘unilaterally determined’:

“Whether the terms and conditions were unilaterally determined should be evaluated case by case on the basis of an overall assessment. For that overall assessment, the relative size of the parties concerned, the fact that a negotiation took place, or that certain provisions thereof might have been subject to such a negotiation and determined together by the relevant provider and business user should not, in itself, be decisive.”

The requirements of the P2B Regulation in relation to OIS terms and conditions set out in Art. 4 and 5 are many, prescriptive and granular. Terms that are non-compliant with the P2B Regulation are generally null and void. The main requirements are that the Ts&Cs must:

generally:

  • be drafted in plain intelligible and specific language and avoiding misleading language;
  • be easily available for business users at pre-contractual and all other stages of the relationship; and
  • ensure that the identity of the business user providing the services via the OIS is clearly visible;

during relationship lifecycle:

  • include information on any additional distribution channels and affiliate marketing programmes by which the platform provider can market goods and services offered by business users;
  • include details of most favoured nation and price parity provisions;
  • include the main parameters determining ranking (relative prominence of goods or services) and the reasons for the relative importance of those parameters;
  • include a description of the type of ancillary services offered via the platform and whether and if so how the business user can also offer its own ancillary goods and services;
  • be transparent as to the economic, commercial or legal reasons for differences in treatment of services offered by the platform provider and the business user;
  • include general information regarding intellectual property rights of business users; and
  • set out the technical/contractual access the business user will have to personal or other data provided by business users or consumers;

as to change in terms, termination, suspension, etc:

  • generally notify business users of changes to the terms and conditions by reasonable and proportionate notice of no less than 15 days and which allows the business user to terminate before notice expiry;
  • include information about when business users can terminate the contractual relationship with the platform provider;
  • provide business users with a statement of reasons for any restriction or suspension of platform availability for individual services;
  • generally provide business users with a reasoned notice of no less than 30 days for termination of the platform services (subject to exceptions including repeated breach, illegal content, product safety, counterfeiting, fraud, malware, spam, data breaches, other cyber security risks or suitability of services for minors);
  • state that grounds will be given for decisions to suspend, terminate or restrict service provision; and
  • set out post-termination technical/contractual access to the data the business user provides or generates; and

as to complaints and disputes:[4]

  • include relevant information about access to and functioning of internal complaint handling systems; and
  • set out the identity of two or more mediators to resolve disputes with business users about their services.

By Art. 7 P2B Regulation, additional rules apply to technical interfaces affecting business users that are directly connected or ancillary to using the platform concerned. Art. 7 requires the platform provider to include in its Ts&Cs a ‘description of the main economic or legal considerations’ for ‘differentiated treatment’ for those services offered as between the business user (on the one hand) and the platform or any business users that the platform controls (on the other).

The main requirements applicable to OSEs are set out in Art. 5. Briefly they require the OSE provider to set out:

  • the main parameters that, individually or collectively, are most significant in determining ranking;
  • an easily and publicly available description of relative importance of those main parameters;
  • where the main parameters make it possible to influence ranking through direct or indirect remuneration paid by business users or corporate website users, a description of those possibilities and the effects of such remuneration; and
  • how a corporate website user can review a notification received from a third party that has led to the OSE provider altering the ranking order or delisting a particular website

 

Footnotes

[1] Defined at Art.1(1) as “any private individual acting in a commercial or professional capacity who, or any legal person which, through online intermediation services offers goods or services to consumers for purposes relating to its trade, business, craft or profession”.

[2] as implemented under UK law by the EC Directive Regulations 2002 SI 2002/2013 as amended (the ‘UK Regs’).

[3] Recital 18 of the ECD provides examples of economic activities that do and do not fall within the definition.

Activities falling within the definition include: (i) selling goods online, (ii) offering online information or commercial communications (as an economic activity), (iii) providing tools allowing for search, access and retrieval of data (as an economic activity), (iv) transmission of information via a communication network, (v) providing access to a communication network, (vi) hosting information provided by a recipient of the service, (vii) video on demand and (viii) provision of commercial communications by electronic mail.

Activities not falling within the definition include: (i) delivery of goods, (ii) off-line service provision, (iii) broadcasting (because it is not provided at individual request) and (iv) personal use of email.

[4] These rules do not apply to enterprises employing less than 50 persons and whose turnover or balance sheet is less than €10m.

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