Push for stiffer EU regulation of online platforms needs to be justified, says UK minister

Out-Law News | 08 Sep 2015 | 3:39 pm | 2 min. read

EU countries pushing for stiffer regulation of online platforms should be forced to explain the rationale for their views in more detail, the UK's culture minister has said.

Ed Vaizey told the House of Lords' EU Internal Market, Infrastructure and Employment Sub-Committee that he thinks the push for tighter regulation of platforms is motivated by the fact the platforms are largely major US-based technology companies and not companies "based or grown out of" the EU.

"There is a political overtone to some of the discussion on platform regulation and some member states are more suspicious of the behaviour of platforms than other member states," Vaizey said.

"I don't think it is a secret that some member states do have concerns about some of the platforms but my instinct is that those concerns are based on the fact that those platforms are not based or grown out of the member states themselves and if they were of a different nationality those concerns might melt away. So we need greater clarity … from those member states that are talking about platform regulation about what they mean by platforms and what specific regulation they are talking about and what ill they are trying to cure," he said.

The Lords' EU Internal Market, Infrastructure and Employment Sub-Committee has begun an inquiry into online platforms. Vaizey said he thinks an "in-depth analysis" of the topic by the committee "would help the British government in terms of encouraging our fellow member states to frame their arguments as accurately as possible".

In its digital single market strategy published in May, the European Commission said it would launch "a comprehensive assessment" of the role of platforms and intermediaries in the digital economy before the end of this year. It is expected to launch a consultation on the power of platforms this month.

According to a report by POLITICO, Andrus Ansip, EU digital commissioner, said on Monday that the Commission will "carefully consider if new measures are needed and what impact they might have on incentives to innovate and deliver new services”. The Commission confirmed that no new proposals in this area would be tabled before spring 2016.

Vaizey said that there needs to be a "pretty convincing case" that additional regulations need to be applied to online platforms.

"In terms of regulating platforms I think one needs to have a pretty convincing case that some kind of new regulatory regime is required over and above a sort of competition regime that already exists to deal with any perceived or actual anti-competitive behaviour," Vaizey said. "I also think there needs to be an examination of the cultural mindset when it comes to platforms and disruptive technologies."

"We in the UK government have ... effectively welcomed disruptive technologies because we think they are innovative and focused on the consumer, and indeed in some cases particularly for example in our analysis of the sharing economy we have looked at where we can reform or change or abolish regulations that hold back the establishment of some of these new sharing economies," he said.

Competition law expert Natasha Pearman of Pinsent Masons, the law firm behind Out-Law.com, said that imposing a new regulatory regime on online platforms could stifle innovation.

"There have been concerns raised about the influence online platforms have on the way businesses that use them operate, particularly where those platforms have significant market power," Pearman said.

"As the Commission's digital strategy highlighted, one concern raised about the way online platforms operate relates to whether they constrain the ability of SMEs to switch to rival services," Pearman said. "Businesses can feel locked-in to using one platform if they are unable to transfer the data generated about their business on those platforms, such as customer profiles and endorsements, to other platforms."

"However, the imposition of new data portability rules and other regulatory requirements risks stifling innovation and could serve as a barrier to new disruptors entering markets that otherwise tend to be fast-moving and liable to change. The Commission already has existing competition law powers should it need to take action, but a more effective approach might be for the Commission to encourage industry to establish voluntary data sharing principles that give businesses reliant on platforms greater flexibility," she said.