Report says B2B markets are hampered by legal concerns

"Companies have every right to feel uneasy about sharing their data in eMarketplaces," said Jaap Favier, senior analyst at Forrester's European headquarters. "In the off-line world, companies sign non-disclosure agreements all the time. They shouldn't settle for anything less in an eMarketplace - and should take a 'no safety, no sales' attitude when joining eMarkets. Importantly, the EU's strict digital-privacy laws apply to individuals and not to companies, so corporate data provided to an online exchange doesn't fall under EU law."

John Salmon of OUT-LAW.COM commented that Favier’s statement could be slightly misleading. He said:

“In the off-line world, companies do not sign non-disclosure agreements all the time. They sign them when necessary. The same should be true on-line. If your business is routinely buying new hardware or software on-line, you may not feel the need to keep your transactions confidential. This would be different if you are sharing confidential data.

“The EU’s data protection laws, or digital privacy laws, as Favier refers to them, do indeed apply to companies – but what I think he means is that corporate data provided to an on-line exchange is not automatically protected as confidential. This should be common sense: you would not submit confidential information without ensuring that any recipients know it is confidential – and this is when you would use non-disclosure agreements or ensure that the terms and conditions include a confidentiality clause.”

To make B2B exchanges succeed, Forrester is advising eMarketplaces and their participants to self-regulate data management in line with the EU’s E-commerce Directive, which prescribes that buyers and sellers get to know each other's identity and contractual terms before they complete a transaction. Participants must set up disclosure levels to ensure that sensitive data can't reach their competitors, while offers and bids get fully exposed to potential partners.

“Again,” observes Salmon, “this is a common sense approach. No business would transact with another business in the off-line world without knowing who it was trading with and without examining the terms and conditions of sale. The same is true in the on-line marketplace.”

Forrester’s research of 40 European companies found that half of the buyers and sellers worried about security, privacy and data protection. 33% said that legal concerns had a “decisive” effect on their trading volume. Against this, the most popular answer when asked how much trust they have in eMarketplaces was “strong”.