LORDS

Better protection for users of online platforms urged by committee

20 April 2016

A new kite-mark for privacy standards on all EU websites and a competition investigation into online travel agents are two of the recommendations made in the EU Internal Market Sub-Committee report which calls for better protection for the users of online platforms.

Background

The EU Internal Market Sub-Committee has been investigating whether large online platforms, such as Google, Amazon, Uber and Airbnb, which act as gateways to some markets, operate above the law. Its report, Online Platforms and the Digital Single Market, sets out its findings which cover regulation, e-commerce, consumer protection, and competition.

The report recognises that online platforms have accelerated e-commerce across Europe, and that the UK is at the forefront of business creation, with 17 of Europe's 40 so-called 'unicorns' (tech start-ups valued at $1bn) based in the UK. However the report also highlights areas where current regulation isn't working, such as competition law being too slow and mergers going 'under the radar'. Instead of introducing a new regulatory framework for platforms, it argues that the existing regulations should be updated and more robustly enforced.

Key findings

Competition law

  • Interim measures and time limits for commitment proceedings should be used to speed up competition cases
  • Asymmetries of bargaining power between online platforms and supplier businesses should be addressed with codes of practice and protection for complainants, the Commission's 'sector inquiry' instrument should also be strengthened
  • Thresholds in the EU Merger Regulation should be changed so that small firms acquisitioned by large online platforms do not escape scrutiny.

The Committee also urges the UK Competition and Markets Authority to carry out an urgent market investigation into the online travel agent sector. The Committee heard claims that online travel agents have intimidated hotels which gave better rates to their competitors and used deliberately misleading messages about vacancies, and so-called 'shell websites' which pretend to be the hotel website to take bookings at a higher rate.

Data protection

  • A kite-mark should be created for all websites and applications, indicating to consumers the quality of privacy policies. In order to foster competition and drive up privacy standards, this kite-mark should include a graded scale.

Consumer Protection

Consumer protection law should be updated to be require online platforms to be more transparent about:

  • Their obligations to consumers under consumer protection law
  • How they rank and present search results and ratings and reviews
  • When they undertake personalised pricing or price discrimination.

Support European platforms by:

  • Ambitiously implementing the Digital Single Market to create a market of 500m consumers
  • Increasing investment by strengthening Europe's Venture Capital market
  • Putting innovation at the heart of policymaking.

Disruption of regulation by digital businesses will continue:

  • An independent expert panel should be created to act as an outlet for public and political concerns, subject these to rigorous scrutiny, and make policy recommendations designed to accelerate the growth of the digital economy.

Further information

Image: iStockphoto

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