A New, Safer Era for Online Marketplaces
Two weeks ago, a press release from the European Union came to signal the beginning of a new era for card processing, merchant protection and online payments. As the press release states, “the Council of the European Union and the European Commission reached a political deal on the first-ever rules aimed at creating a fair, transparent and predictable business environment for businesses and traders when using online platforms.”
Vice-President for the Digital Single Market Andrus Ansip said: “Today’s agreement marks an important milestone of the Digital Single Market that will benefit millions of European companies relying on digital platforms to reach their customers. Our target is to outlaw some of the most unfair practices and create a benchmark for transparency, at the same time safeguarding the great advantages of online platforms both for consumers and for businesses.”
The list of changes is thoroughly analysed on the press release and the Q&A documents but we have summarized some of the key points for your convenience.
- In order to suspend an account you need to provide reasoning and explanation. The T&Cs must clearly identify the reasons for which platforms can block or terminate the account.
- A lot of emphasis was placed on the clarity of the T&Cs for these platforms. The T&Cs must be composed in clear, concise and straightforward language avoiding ambiguity and be accessible to read at all times.
- Online search engines need to notify consumers in the scenario where the ranking of a search result is affected by agreements with the users of the website.
- If an online platform/marketplace is selling its own products on the platform, it needs to clearly state and describe the way those products are treated or ranked in search results than the products of other vendors on the platform.
- A lot of emphasis was also placed on the communication of sellers and the marketplaces/platforms. The platforms will now be asked to set up a coherent internal and external complaints system. This system must be easily accessible and establish a clear communication channel between sellers and the platform. The system must be aimed at solving problems between parties and out of court. Marketplaces or platforms with fewer than 50 employees and less than 10 million euros annual turnover can be considered an exception and do not need to adhere to this specific measure.
Does the New Regulation Apply for Everyone?
No. The new regulation does not apply to online advertising, payment services, SEO services, purely technical connection platforms and platforms that only operate B2B. Also online retailers, that sell their own products directly to the consumer (e.g. Nike) are not subject to the new regulation.