Out-Law News 2 min. read

The UK will oppose regulation that undermines advantages provided by online platforms, says minister

Online platforms provide a range of benefits to consumers and businesses that new regulations should not erode, a UK minister has said.

In a speech in London last week Baroness Neville-Rolfe, the UK's parliamentary under-secretary of state for the Department for Business, Innovation and Skills said that online platforms have brought "huge benefits" and that the UK "will oppose any form of regulation that would undermine these advantages".

"[Online platforms] have given us access to new goods, new worlds, new relationships, new services and shared services, all at unimaginable speeds," Neville-Rolfe said. "Central to this is an open approach to platforms. Platforms should be seen as an opportunity not a threat. As a consequence, consumers benefit from increased convenience, greater choice and quality of services, improved transparency and increased connectivity."

"Businesses benefit from a reduction of geographic barriers, supporting new forms of business through innovative products, more efficient services, access to wider audiences, new funding models and reduced costs," she said. "So an important priority should be to ensure that platforms continue to innovate and offer services consumers and businesses demand."

Neville-Rolfe said that there are tools of enforcement that can be applied to platforms that negate the need for new regulations.

"There is already a legal framework of consumer and competition law in place that applies equally to platforms as well as other digital businesses," the minister said. "And we should apply that framework to platforms as to any other business. We should use our existing legislative toolkit consistently and fairly rather than introduce new regulations specifically for platforms."

Neville-Rolfe's comments echo those made by UK culture minister Ed Vaizey before a UK parliamentary committee in September 2015, just before the European Commission opened a broad consultation into "the economic role of online platforms".

In October last year, the head of the UK's main competition authority warned policy makers not to impose new "broad-brush" regulatory requirements on online platforms.

Alex Chisholm, chief executive of the Competition and Markets Authority, questioned whether "any type of broad-brush legislation or economic regulation could provide satisfactory outcomes" in the market for online platforms given the diverse nature of those platforms and their operations.

At the time of Chisholm's remarks, competition law expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said: "If the authorities intervene too early, whether using their competition or consumer powers, they risk over-regulating transient technologies or businesses, or potentially even distorting the development of nascent markets. Conversely, if the authorities intervene too late then important consumer-facing markets may have already become distorted by incumbent dominant players. In short, there are significant issues of when and how the authorities should intervene in relation to online platforms."

"Even if a competition authority decides to intervene in a particular case using its competition powers, there are significant dangers of doing so using already outdated approaches to market definition that do not adequately take into account the rapid evolution and interlinking between online platforms performing an intermediation role and the providers of the underlying goods or services," he said. "The CMA is absolutely right to approach this area with considerable caution."

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