EU regulatory change for online businesses
Background
The European Commission’s “Proposal for a Regulation for fairness and transparency for business users of online intermediation services” aims to strengthen small and medium-sized enterprises against powerful online intermediaries and search engines. The regulation targets portals where end users access business offers, including social networks, hotel and flight search engines, supply service platforms, price-comparison sites, and auction portals.
Many businesses have become dependent on these platforms for survival. According to the document, “some businesses, especially in the supply services sector, have chosen not to set up their own online offers in order to save on technical maintenance and avoid compliance costs.” This dependence leaves them vulnerable to harmful trading practices with minimal recourse.
Search engines similarly exercise considerable power, as SME revenues depend heavily on favorable search result placement. While established brands dominate short-tail keyword searches, smaller players rely on long-tail keywords for visibility.
The Regulation Applies to Only EU-Based Companies
Following the GDPR model, this regulation applies to companies offering online intermediation services or search engines with websites available within the EU, regardless of where their registered offices are located.
New Fairness and Transparency Rules for Providers
Online intermediation platforms must now disclose objective criteria for commercial users to place or discontinue offers. Platforms must inform commercial participants of significant term changes at least 15 days before implementation.
To suspend or end offers, platforms must provide accountability by informing providers of decisions and clearly stating specific facts referencing their stated grounds.
Platforms must disclose “the most important parameters for the ranking of listed offers” and explain how fee payments affect listings, while remaining permitted to protect business secrets.
Market Barriers and Unclear Relationship with Competition Law
Critics worry the regulation creates entry barriers. The “one-size-fits-all” approach treats major portals identically to startups, potentially allowing financially strong companies to better navigate complex requirements while disadvantaging newcomers.
What It Means
The regulation could paradoxically strengthen existing market dominance by creating compliance burdens that favor established players with greater resources to implement these requirements properly.