State of play
Online platforms or online intermediaries are online spaces in which the platform operator brings together users to facilitate interactions such as the exchange of information or commercial transactions. Online platforms include e-commerce marketplaces, online app stores, online search engines, social media and online media platforms, e.g. eBay, Facebook, Google Search, Yandex, Zalando. The key characteristics of online platforms are data-driven ‘network effects’, which means that the value of the service increases with the number of users; the economies of scale and scope result in cost efficiencies.
According to the European Commission’s estimate, around 7,000 online platforms of various sizes currently operate in the EU. These platforms are transforming various sectors of economy such as internet software and services; e-commerce and retail; travel, leisure and hospitality; as well as logistics and transportation. The effective functioning of the Digital Single Market is a key precondition to help businesses and consumers to take advantage of the platform economy.
For businesses – especially small and medium-sized enterprises (SMEs) – online platforms offer digital trade opportunities by providing them with fast and efficient access to global markets. More than one million EU businesses sell goods and services via online platforms. Among these, more than 50% of small and medium-sized enterprises sell cross-border. According to the Commission’s factsheet, 22% of the value of e-commerce (worth €530 billion in 2016) was generated by merchants selling products and services via online platforms. For customers, online platforms offer an increased choice of goods and services, greater price transparency and time savings. According to the Joint Research Centre’s report, platforms also hold the potential to contribute to a more resilient society by facilitating socially beneficial activities, such as volunteering and ride-sharing.
While businesses have benefitted from the opportunities presented by online intermediaries, they are becoming increasingly dependent on such platforms as apparent ‘gatekeepers’ to markets. The asymmetry of power can lead to potentially harmful trading practices such as delisting without a statement of reasons, or sudden changes to a platform’s terms and conditions. When in dispute with an online intermediation service, business users need channels to seek effective redress.
Regulation of the online platform economy has been complicated by the emerging regulatory fragmentation in the EU. To address issues such as unfair contractual clauses and trading practices in platform-to-business relations, and to promote transparency and fairness within the platform economy, the Commission set up an Observatory to monitor developments in the online platform economy in the EU. The EU has also adopted the Regulation on promoting fairness and transparency for business users of online intermediation services (P2B regulation), which was approved and signed by the European Parliament and the Council in June 2019. The Regulation entered into force on 31 July 2019, and will apply from 12 July 2020.