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Online marketplaces: what EU lawmakers will look at next

The rules applicable to online marketplaces in Europe are being updated, in particular within the framework of the new Digital Services Act (DSA). Here’s what European lawmakers will consider next.

Implementing the Digital Services Act: From Political Rhetoric to Reality

Online marketplaces will need to start implementing DSA in the coming months. The DSA contains a specific chapter dedicated to marketplaces. Two provisions will probably raise questions because they are based on concepts that remain open to interpretation. First, marketplaces will have to make “their best efforts” to assess the reliability of the information provided by their sellers. Second, they must make “reasonable efforts” to carry out random checks to see if the products or services offered have been previously identified as illegal.

Another challenge will be to determine what the European Commission’s definition of “active users” actually entails. Who should be considered an active user of an online marketplace? Is it a viewer who stumbles upon a website, a logged in person, or an actual buyer? The number of active users is essential, as the Commission will use it to decide whether a marketplace is a so-called “very large online platform” (VLOP) – defined as those with at least 45 million active users in the EU – or not. And under the DSA, these VLOPs will have many more obligations to comply with and rules to implement than others and less time to do it.

Finalizing new EU product safety rules: keeping obligations realistic

The General Product Safety Regulation (RGPS) introduces specific obligations for online marketplaces. Like these new EU product safety rules are now in the final phase of negotiations between the European Parliament and the Council, there are some important issues to keep in mind:

The time for a marketplace to respond to user reviews that report potential security issues is expected to drop from five to three business days under the new rules. However, since consumers are obviously not experts on product safety, these reviews are usually not as accurate or very reliable. They cannot be taken at face value and usually require further investigation. Indeed, practice shows that online marketplaces need more time to investigate reviews than the three days currently on the table. Otherwise, it will not be possible for them to remove only dangerous products, which would lead to an excessive removal of safe products, which would penalize legitimate merchants and reduce consumer choice.

The revised GPSR will also require marketplaces to remove all products that were previously flagged as unsafe if the uploaded content is identical and does not require further research (the so-called “suspension obligation”). However, automated tools for detecting identical products have their limitations, as the listings vary depending on the information provided by the merchant (such as photos and descriptions). If not adapted to reality, this obligation could also have unforeseen consequences for reputable traders and consumers.

Revision of the EU liability framework: appropriate responsibilities for marketplaces

On September 28, the European Commission is due to present its proposal for reform the Product Liability Directive (PLD). It is expected that the Commission will endeavor to designate a responsible person from whom consumers can demand compensation. While this is important, policymakers should strive to regulate online marketplaces in a way that recognizes their nature and does not impose an unnecessarily strict liability regime. Indeed, each company opts for a different (hybrid) business model in order to differentiate itself, often also offering additional services such as delivery, warehousing or manufacturing. One thing that all markets have in common is the incredibly large amount of new content uploaded every day to list new products, and the speed at which this happens. This “behind the scenes” reality must be taken into account by European lawmakers to achieve the intended objective of the PLD revision, such as allowing consumers to demand compensation from the manufacturer’s representative in the EU for example.

European lawmakers are clearly busy reforming the rules that govern the digital world, and online marketplaces are no exception. Hopefully they will ensure that their legislative initiatives are as coherent and compatible as possible and that they avoid a patchwork of overlapping and contradicting rules. To retain the unique added value of online marketplaces, industry and regulators must work together to create a legal framework that is scalable and responsive to reality.