New regulation supports businesses using online platforms to trade

The Regulation is aimed at online marketplaces and search engines and their dealings with the businesses that use their platforms. The aim of the Regulation is to encourage platforms to deal with businesses in a transparent and fair manner.

The Regulation will have a notable impact on the rights available to the businesses that use online platforms, such as Amazon, Etsy, Facebook and Instagram to market or sell their products or services, as well as those that use paid advertising on search engines. We have therefore prepared the below summary of the Regulation and an explanation of the impact it will have on businesses that operate through these platforms.

Which platforms will be affected by the Regulation?

The Regulation is intended to apply to platforms providing their services to businesses in the EU and those that offer goods or services to consumers in the EU in the following sectors:

1. online e-commerce marketplaces (e.g. Amazon Marketplace, Etsy and eBay);
2. online software applications services (such as the App Store and Google Play);o
3. online social media platforms (e.g. Instagram, Twitter, TikTok or Facebook); and
4. online search engines (such as Google or Bing).

Certain types of online businesses, like online retailers selling direct to consumers and AdTech are excluded from the Regulation.

If you are a business operating on any of the above platforms (and your operations are not excluded), your business ought to benefit from the below amendments to the law.

Key provisions

The main changes that the Regulation has introduced are as follows:

1. Transparent terms and conditions: Platforms must now provide the businesses that use their services with standard terms and conditions in plain and intelligible language, that are easily available and transparent. The terms and conditions can only be modified if announced in advance and will typically require 15 days’ notice to the business user. The terms and conditions must also include information on:
2. When the business user can terminate their relationship with the platform;
3. When the platform can suspend, restrict or terminate a business user’s use of their service;
4. How a business user can access their personal data or other data generated through their use of the platform;
5. Include any restrictions on products that can be sold by business users via the platform; and
6. The additional channels and potential affiliate programmes through which a business user’s products will be marketed by the platform.

What does this mean for businesses?

All terms and conditions that apply to your use of any of the platforms affected by the Regulation must comply with the above requirements. Whilst the Regulation is silent on which public authority (if any) will be responsible for enforcing these matters against platforms, you may be able to challenge non-compliant terms and conditions with the platform directly or bring a claim against them for breach of statutory duty if the breach results in loss.

1.  Controls on suspension and termination: Before terminating a business user, platforms must now:
2. Give the user a statement of reasons for that decision on a durable medium;
3. Provide at least 30 days’ prior warning (in most cases) of termination;
4. Preserve the business user’s data so that the account can be reinstated if the account is closed in error.

All platforms must comply with the above requirements when suspending or terminating a business user’s account. If they do not, you may be able to bring a claim against the platform for breach of statutory duty if you have suffered loss.

2.  Ranking: platforms must also provide business users with details of the main parameters used to rank search engine results and give a high-level overview of the operation of the search engine (but there is no obligation to provide its algorithm or other sensitive information). If a website is demoted or delisted from a platform’s search result as a result of a third party notification (such as an allegation of an infringement of IP rights), the website owner should be able to view the notification.

This should offer much more transparency over rankings on search engines in order to allow business users to better tailor their use of these platforms to maximise return and efficiency.

3.  Dispute resolution: the Regulation also requires platforms to offer business users a variety of methods to resolve disputes, including an internal complaints handling process and providing the option of mediation. Platforms must also follow certain transparency requirements in relation to disputes.

This should provide businesses with a cheaper and more efficient way of resolving disputes with platforms, which have historically operated more opaque dispute resolution mechanisms.

What should I do if the Regulation affects me?

If you are a business user operating via an online platform affected by the Regulation, we would be delighted to discuss the new rights and options available to you under the Regulation, as well as your options if you have a potential dispute with a platform. We are also happy to advise you on the compliance of any platform(s) you use to trade.

Please contact Howard Ricklow or Raj Shah for more information.