Breton: Online platforms are no longer just ‘hosts’ in the digital economy

The EU's Internal Market Chief Thierry Breton has given a clear indication that online platform giants can no longer be defined merely as 'hosts' as part of the bloc's attempts to regulate the digital economy.

European Commissioner for Internal Market Thierry Breton. [EPA-EFE/FRANCISCO SECO]

Online platform giants may no longer be defined merely as ‘hosts,’ the EU’s Internal Market Chief Thierry Breton suggested on Monday (28 September), as the bloc is making a concerted effort to regulate the digital economy.

The European Commission is due to unveil its Digital Services Act package before the end of the year, which will introduce regulation across areas of the platform economy ranging from liability, market dominance, online advertising, to safety, smart contracts, online self-employment, and future governance frameworks.

Speaking to MEPs in European Parliament’s Internal Market Committee, Breton highlighted how the digital economy is unregulated to the extent that platforms may now have become “too big to care,” and that as a result, he suggested that the Commission may seek to clarify how certain platforms are legally defined.

“The crisis has also shown that maybe those platforms tend to neglect the consequences of their actions in our daily environments, whether it be in work in our social lives, but also, when it comes to our democracy,” he told MEPs. “Perhaps these platforms have become too big to care.”

“And that’s something that we must deal with, just as we did with banks, we’re going to have to acquire the necessary regulatory tools to control those players.”

“They are no longer just online hosts, but they are vertically integrated and advertising players and that is this how they are gatekeepers,” Breton added.

Current EU rules on the definition of hosting providers under the 2000 eCommerce Directive include liability exemptions for such firms included in this scope. Article 14 of the Directive provides that hosting providers are not liable for the content they store, under certain conditions.

However, the definition of a hosting provider under the eCommerce Directive has long been a point of contention, and the ambiguity in this respect has given rise to a legal environment by which the European Court of Justice on several occasions has had to determine the text in order to draw its own conclusions on what constitutes a hosting service.

In this context, Breton’s comments indicate that the Commission may seek to clarify the role of the digital giants in the online economy, under the rubric of ‘gatekeeper platforms.’

New Competition Tool

Speaking at an event on Online Competition staged by the German Presidency of the EU in early September, the Commission’s Vice-President for Digital, Margarethe Vestager, also noted how Europe’s online marketplaces should not be controlled by a handful of dominant gatekeeper platforms.

“Europe’s online marketplaces should be vibrant ecosystems, where startups have a real chance to blossom. They shouldn’t be closed shops, controlled by a handful of gatekeeper platforms,” she said.

In wider EU attempts to clamp down on so-called ‘gatekeeper platforms,’ the EU executive will, alongside the Digital Services Act, also present before the close of the year a New Competition Tool, which will be designed to mitigate structural risks in markets and intervene in situations whereby a market is close to ‘tipping.’

Market tipping refers to the situation where one company obtains high monopoly profits and market share, creating an anti-competitive environment for other firms. It is common in the digital economy among gatekeeper platforms with network effects.

Parliament reports

Meanwhile, in the European Parliament, various committees are in the stages of adopting their initiative reports on the Digital Services Act, ahead of the Commission’s presentation of the measures before the end of the year.

Last Tuesday, EPP MEP Kris Peeters’ text was backed by Civil Liberties members and supported the notion of maintaining the fundamentals of the eCommerce directive – including the limited liability provisions and the ban on general monitoring obligations.

The report also rallied the importance of consumer rights and forms of redress for online actions by automated technologies, as well as greater transparency for online political advertising.

Meanwhile, S&D MEP Alex Agius Saliba’s report in the Internal Market Committee will be voted on Monday, and notes the importance of transparency in seller identifications, as well as reinforcing liability provisions for hosting providers.

On Thursday (1 October), Parliament’s Legal Affairs report, led by S&D’s Tiemo Wölken, will go to the vote, as MEPs in the committee look to have found consensus on a series of compromise amendments.

“We reached a compromise supported by a large majority of the groups,” Wölken said on Monday, calling the agreement between Parliamentary groups ‘fair’ and ‘progressive.’

He further praised common ground found on not imposing the use of upload filters for the moderation of online content.

“The DSA explicitly should not contain any obligations to employ upload filters or any form of ex-ante control for content. The voluntary use of automated tools for platforms may not lead to ex-ante control of content, and should generally be proportionate, justified, and transparent.”

[Edited by Zoran Radosavljevic]

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