The role of online platforms in the Digital Single Market: opportunities and challenges for Europe

Blog article
Bruno ZAMBARDINO

social mediaIn the package of measures presented by the European Commission on 25 May, together with the proposal for a new Audiovisual Media Services Directive which we have already given an account, there is also a Communication that informs us about upcoming policy intentions in developing online platforms, looking at both the innovation opportunities and the regulatory challenges posed by these individuals.

In fact, among the commitments made under the Digital Single Market Strategy launched last year, the Commission was committed to carrying out a comprehensive assessment of the role of platforms.even in the context of collaborative economics) and online intermediaries. This analysis then resulted in a series of workshops and studies and, above all, a wide-ranging public consultation which was highly attended by stakholders.

The premise of the document attempts to perimeter online platforms while aware of the different shapes and sizes they can take on and the pace at which they are currently evolving, they cover a wide range of activities, including online advertising platforms, markets, search engines, social media and creative content outlets, application distribution platforms, communication services , payment systems and platforms for the collaborative economy. Among the examples cited (non-exhaustive list) we find subjects such as AdSense of Google, DoubleClick, eBay and Amazon, Google and Bing Search, Facebook and YouTube, Google Play and App Store, Facebook Messenger, PayPal, Zalando and Uber. The effort to identify some common specific features is appreciable:

– create and form new markets, compete with traditional markets and organise new forms of participation or business activities based on the collection, processing and modification of large amounts of data;

– operate within multilateral markets, but with varying degrees of control over direct interactions between groups of users;

– benefit from the "network effects", by virtue of which, generally, the value of the service increases with the increase of users;

– they often rely on information and communication technologies to reach their users instantly and easily;

– perform a key role in the creation of digital valueand, in particular, by intercepting this value in a significant way (including through data accumulation), facilitating new entrepreneurial initiatives and creating new strategic dependencies.

While it is true that some competitive platforms worldwide were born in Europe, for example Skyscanner and BlaBlaCar, on the whole the EU contributes only 4% of the total market capitalisation of the major online platforms, the vast majority of which originated in the United States and Asia. This is why policies must be adopted to encourage and support development among member states.

It is well known that the platform economy offers new European companies great opportunities for innovation and presents, even for established market participants, the opportunity to develop new business models, products and services. Europe has a prosperous start-up community with dynamic entrepreneurs chasing new opportunities in the collaborative economy and in sectors such as energy, healthcare, banks, creative content and more. As an illustration, Applications made by European developers account for 30% of the overall revenue for the main distribution platforms.

Creating the right general conditions and the right environment is therefore essential to retain existing online platforms in Europe and to increase and encourage the emergence of new platforms.

How will the European Commission proceed?

Firstly, in order for Europe to take full advantage of the platform economy and stimulate the growth of European start-ups in the sector, it is clear that the first obstacle to be removed in the direction of the single market is the 28 different regulatory frameworks for online platforms. The presence of different national (or even local) rules on online platforms creates uncertainty for economic operators, limits the availability of digital services and creates confusion in users and businesses. The presence of harmonised EU-wide rules, such as the recently adopted General Data Protection Regulation and the Network and Information Security Directive, is important to facilitate the growth and rapid evolution of innovative platforms.

It should also be taken into account that there are EU rules governing online platforms in areas such as competition, consumer protection, personal data protection and single market freedoms. Compliance with these rules by everyone, including platforms, is therefore essential to ensure that all operators can compete in fair and fair competition. This will create a climate of trust that will allow both companies and the general public to interact without fear with online platforms.

Thirdly, the need to promote the innovative role of platforms means that all measures proposed EU future regulation should only treat problems clearly circumscribed about a specific type of online platforms or to a specific task that they perform, in accordance with the principles of the quality of regulation. The starting point for adopting such a problem-based approach should be an assessment of whether the existing framework is still adequate.

Finally, important roles can play auto-regulatory measures and co-regulation based on reference principles, including industry tools to ensure the application of legal requirements as well as appropriate monitoring mechanisms. With the help of these mechanisms, these measures can strike the right balance between the needs of predictability, flexibility and efficiency and the need to develop "future proof" solutions.

In this scenario, the Commission sets out four main policy areas which are also articulated in various intervention measures:

1) equal competitive conditions for comparable digital services;

2) responsible conduct by online platforms to protect fundamental values;

3) transparency and fairness to maintain user trust and safeguard innovation;

4) Open and non-discriminatory markets within the framework of an economy based on Data.

The challenge now is how to translate these principles into relevant policy programmes that enable Member States to take common measures given the cross-border nature of these individuals. Let us take the second point, which is crucial for the development of the digital economy, namely theresponsibility system of the online platforms connected to the protection of minors and more generally to consumers. The figures reported by the Commission are very telling: one in three Internet users is a child. Compared to 2010, the risk of children aged 11 to 16 being exposed to hate speech increased by 20%. In addition, children are more exposed to adult-only online content, which often has no access restrictions (23 of the 25 major adult websites visited by British internet users provide instant, free and unlimited access to hard core pornographic videos). In 2015 alone, the UK Internet Watch Foundation identified 68,092 unique URLs containing child sexual abuse, hosted on servers around the world. Around three-quarters of all public consultation participants and the majority of consumers, citizens and businesses called for greater transparency regarding the content policies adopted by the platforms. According to the opinion of more than two-thirds of participants, different strategic approaches to reporting and intervention procedures are required for different categories of illegal content. In July 2015, more than 400 hours of video content per minute was uploaded to YouTube.

Come sottolineato dalla studio legale Portolano Cavallo, la posizione della Commissione su questo tema appare ferma: “the Commission will maintain the existing intermediary liability regime while implementing a sectorial, problem-driven approach to regulation". Specific initiatives based on individual issues should therefore be adopted rather than an extension of the scope of intermediary responsibility set out in Directive 2000/31/CE. A first example comes from the proposal for a new Audiovisual Media Services Directive, which – while remaining the e-commerce Directive's forecasts on the responsibility of internet service providers – provides for the obligation for Member States to introduce measures aimed at the protection of minors and against hate speech and violence in the context of online video sharing platforms, possibly through the method of co-regulation. It seems that this approach has already paid off. On 31 May, in fact, the same European Commission presented together with Facebook, Twitter, YouTube and Microsoft, a code of conduct with a list of commitments to combat the spread of thehate speech, that is, the online hate speech in Europe.