What does this cover?

In September we reported  on the EU Commission's announcement that it would launch a public consultation on the regulatory environment for platforms, online intermediaries, data, cloud computing and the collaborative economy. The consultation followed its 6 May 2015 Communication on a Digital Single Market Strategy for Europe whereby the EU Commission expressed its intention "to better understand the social and economic role of platforms, market trends, the dynamics of platform-development and the various business models underpinning platforms".

Subsequently the EU Internal Market Sub-Committee revealed how it would investigate by way of inquiry, the online platforms in the EU Digital Single Market. On 12 October the EU Internal Market Sub-Committee as part of its investigation met to hear evidence from witnesses Agustin Reyna, Jason Freeman, Professor Annabelle Gawer and Joe McNamee.

  • Professor Annabelle Gawer (Platform expert, Imperial College London), detailed how whilst most online platforms utilise personal data typically capturing, exchanging and monetising the data, (e.g. Amazon, Uber, Google and Facebook), it is often in a way which is not always transparent to users. Any introduction of regulation should "focus on the data".
  • Jason Freeman (Director of Consumer Law, CMA) in line with Professor Annabelle Gawer's comments, noted the CMA's recent call for information on the commercial use of consumer data and reported that "there seems to be a disconnect between a consumers stated concerns about privacy and their data and how they actually behave in practice – for any regulatory solution, that [consumer disengagement] would have to be overcome… There are several parts of that problem and one is about constraining the level of data that is to be collected…there are perhaps 3 factors which could constrain data collection; one is consumer constraint…the second is competition constraint…where people compete about the amount of data they collect and what they are going to do with it and the third is data protection regulatory constraint".

He argued that not only should data collection transparency be a focus, but that there is a need to enforce actual consent together with consumer control over what data is being shared and collected. With greater transparency and consumer trust the market would work well and this would be a better option than implementing "hard to future proof" regulations which could "have a detrimental effect on the development of markets". Freeman did point out that regulation for example for sensitive personal information however, is important.

  • Agustin Reyna (Chief Legal Officer, BEUC) was asked to comment on the benefits versus the issues for consumers of online platforms at present. He noted concerns related to data protection, competitive practices and local laws being tailored to the tangible world rather than the online environment; it being a challenge to determine how current laws actually cope with the exponential progress of online development. He outlined that whilst the drawbacks for consumers will vary dependent upon the platform, in terms of benefit, many platforms are offered as a free service – a benefit (although this could mean that payment actually equates to the provision of personal data or exposure to advertising).
  • Joe McNamee (Executive Director, EDRi) highlighted that certain platforms, such as Facebook, create public spaces which are privately owned by the business and so partly subsist on their own rules or Terms of Use. These rules may operate discretionarily in the company's favour and may conflict with both the terms of their own standards and also in respect of local laws.

To view the Select Committee meeting, please click here.

To view the EC Regulatory environment consultation, please click here.

What action could be taken to manage risks that may arise from this development?

Companies should consider whether they wish to participate in the EC consultation on the regulation. The consultation closes around December 2015.