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EUROPE INTERVENES ON ONLINE PLATFORM PROVIDERS
by Francesca Sutti and Lucrezia Puliatti
24 September 2019
The constant increase in buyers turning to the online market has led to a rise in the number of companies that produce goods or offer services and entrust sales activities to ecommerce intermediaries (the so-called eMarketplace operators).
According to ISTAT, 64.1% of companies that sold via the web in 2017 (53.8% in 2016) used an eMarketplace and 50.2% (39.1% in 2016) made at least half of their web turnover through intermediaries.
This has in turn led to an increase in ecommerce intermediaries in at least two different ways: the number of entities managing online sales and promotion platforms has grown, and the power these intermediaries have to influence the market has been consolidated and amplified.
And it is well known that this ability to affect market mechanisms does not only concern the self-determination of the buyer but also extends to influencing the supply.
The European regulator is trying to keep up with this frenetic evolution with more or less organic interventions, aimed at promoting the virtuous functioning of markets by pursuing, first and foremost, transparency objectives.
This year (but set to come into force in June 2020) saw the introduction of Regulation 2019/1150 of the European Parliament and Council, aimed at regulating relations between online platforms and providers (defined as "business users").
The most notable innovation is the requirement for online service intermediaries to prepare a sort of Service Charter (referred to in the text as "terms and conditions") through which providers will be informed about the structure and dynamics of the market, as well as the regulation of typically contractual aspects, such as the procedures for exercising the right of withdrawal by companies or how any contractual changes will be communicated.
The heterogeneity of the various information obligations is summed up in the desire to create a system in which companies providing goods are made aware of the rules the platform intends to apply, so that providers can consciously choose whom to rely on for the promotion of their products.
Among the information that must be communicated by operators, the one that certainly arouses the most interest due to its innovative nature concerns the criteria for the positioning of goods and services.
As is well known, positioning plays a primary role in consumer behavior and choices, as it determines the relevance attributed to goods as a result of the consumer's search.
The Regulation therefore places the burden on platform operators to indicate the main parameters that will affect positioning, such as the compensation they receive from companies, the characteristics of the goods and services offered, and the relevance of these goods and services to the consumer's search.
The Regulation provides that the factors used to calculate positioning will be disclosed, but the ways in which these factors are combined will remain entirely obscure, as confidentiality over the algorithm can be maintained.
In addition to positioning criteria, platform operators must also inform providers of any differentiated treatment they intend to apply to products supplied by the intermediary itself or by companies they control.
Also of definite interest is the fact that among the "terms and conditions" must be included the procedures for business users to access personal data provided by consumers.
Thus, this Regulation, in pursuing the goal of creating a fair market, establishes online platform operators as drivers of virtuous behavior models, recognizing them as playing an important role both towards consumers and towards providers who rely on them for the sale and promotion of goods and services.
The consequences that the application of this regulation will bring to the markets are potentially disruptive.
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