Designed to promote fairness and transparency for business users of online platforms such as Twitter, Amazon Marketplace and others, the Regulation (EU) 2019/1150 (the P2B Regulation) came into direct effect in EU Member States on 12 July, including in the UK.
Is my business affected by the regulation?
Whilst it is clear from published preliminary discussions that this regulation is to apply to e-commerce market places (Amazon Marketplace), online software applications services (Google Play Store for Android), and online social media services (Twitter), the European Commission have not provided much clarity on its application to cloud based contracts. The issue at stake is the definition of an “intermediation service”; Article 2(2) explains:
‘online intermediation services’ means services which meet all of the following requirements:
- they constitute information society services within the meaning of point (b) of Article 1(1) of Directive (EU) 2015/1535 of the European Parliament and of the Council
- they allow business users 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
- they are provided to business users on the basis of contractual relationships between the provider of those services and business users which offer goods or services to consumers.
Cloud services fall within (a) and (c), but the lack of clarity revolves around point (b) which could include cloud and hosting platforms as providers of such a service to their business customers.
Providers and business users should note that the P2B Regulation applies regardless of the choice of law clause within a contract. Furthermore, it applies to online intermediation services and online search engines irrespective of whether these businesses are based within a member state or outside the EU, provided that the business users are established in the EU and that the users offer, through those services, their goods or services to consumers domiciled in the EU for at least part of the transaction.
What effect will this have on online platforms?
Online platform providers will have adopted changes to the way their platforms appear to users, their standard terms and conditions, and to their internal processes. For those providers in the process of doing so, we recommend reviewing the following key points:
- amending terms and conditions so they comply with the P2B Regulation
- ensuring you give 15 days’ prior notice of any change of terms and conditions in a durable medium to business users;
- changes to terms and conditions will only apply retrospectively where required by law or for the benefit of the business user
- the name of the business user must appear clearly on the platform next to the goods or services being provided by such user
- complaints arising out of the way disputes are dealt with, restrictions, suspension and termination of access should be dealt with appropriately and processes must be in place for dealing with the same
- requirements in relation to data collection, processing and storage should be reviewed against the requirements of the regulation to ensure compliance.
What are the consequences of non-compliance?
Consequences of non-compliance for online platform providers include:
- business users may raise complaints through the online platform provider’s complaints procedure
- unresolved issues raised in that way can be referred to mediation
- enforcement action can be taken by users within the UK under the P2B Enforcement Regulations 2020
- terms and conditions which are non-compliant will be deemed null and void
- business users may bring legal action against a platform directly.
Amending your terms and conditions
The P2B Regulation requires platform terms and conditions to include specific information. At the outset, the document or web page must be easily accessible and easy to understand. Some of the information that must be added includes:
- Situations in which the online platform could be restricted, suspended or terminated
- Intellectual property rights and the business user’s rights in respect of IP
- The differing types of data being collected by the online platform and the specific purposes for which it will be used
- Any priority given to goods or services supplied by the online platform provider or connected party
- The presence of exclusivity obligations restricting the user from selling on specific terms
- Details of mediators the online platform provider will engage if no settlement is agreed following the conclusion of the complaints process.
Brexit and the effect on the P2B Regulation
The regulation will continue to apply once the UK leaves the EU at the end of the transition period, due to its retained EU law status. Business users in the UK will benefit from the local regime; the UK is likely to produce new legislation to transpose the regulation into English law. Online platform providers will have to comply if they service business users based in the EU.
In conclusion, the P2B Regulation is something all online platform providers should take account of. Those providing cloud based platforms or hosted platforms should review the policies and processes they have in place. We recommend reviewing terms and conditions as a starting point to ensure compliance.