President Trump called for a crackdown on marketplaces this week, but European regulators have been trying to go much further, with a focus on protecting sellers rather than brands.
The President, who is familiar with Intellectual Property issues through his ownership of the Trump brand, wants to put a stop to the sale of counterfeit brands on online marketplaces.
In Europe, the EU is calling for marketplaces to be more fair and transparent in dealing with online sellers on their platforms through the EU Proposal to Regulate Platform to Business (P2B) Relations.
The new rules would, among other provisions, require online platforms like eBay and Amazon to explain the reasons for removing goods or services from search results or delisting them. That’s no small victory for online sellers. Amazon’s boards in particular are full of complaints from sellers who don’t know the reason for account suspensions or other negative actions taken.
Another requirement sure to be welcomed by small businesses: platforms must provide a description of the parameters determining the ranking; this applies to marketplaces and search engines like Google. In fact, some sellers believe the deck is stacked against small sellers on platforms like eBay, Amazon, and Etsy, but have no way of knowing for sure since the platforms keep their algorithms a secret.
Baker McKenzie published September’s draft proposal on its website, which showed that the EU recognized that businesses are dependent on platforms, which can lead to “potentially harmful trading practices,” citing the following examples:
- unexplained changes in terms and conditions without prior notice;
- the delisting of goods or services and the suspension of accounts without a clear statement of reasons;
- lack of transparency related to the ranking of goods and services and of the undertakings offering them;
- unclear conditions for access to, and use of, data collected by providers;
- and a lack of transparency regarding favouring of providers’ own competing services and so-called most-favoured nation (MFN) clauses which restrict undertakings’ ability to offer more attractive conditions through other channels than the online intermediation services.
In a post on Medium.com on Thursday, Etsy’s Head of Global Advocacy and Policy Althea Erickson heralded the spirit of the regulation, claiming that Etsy was already transparent with sellers. However, she called out one provision in an early draft that she said would have required Etsy to give sellers a 15-business-day notice for suspending their accounts. “Requiring Etsy to wait 15 business days before removing these items would undermine our ability to maintain the integrity of our marketplace, and unfairly disadvantage sellers who play by the rules.”
She praised Etsy sellers for speaking up on the issue, which she credited to helping change the final proposal. Erickson said the provision was re-worked to now apply to account terminations rather than suspensions:
“Article 4 now limits the required 30 day notice period to account terminations. When it comes to account suspensions, platforms will have to provide a business user with a statement of reasons for suspension at the time of the suspension taking effect. We think this approach makes good sense.”
While companies must comply with EU regulations in Europe, that doesn’t necessarily mean they must comply with them in this country. However, some of the scrutiny has made it across the Atlantic thanks to lawmakers, and it’s already having an effect.
In March, Amazon eliminated its price parity requirement after a Senator’s call to break up the company over antitrust concerns, which had gained widespread attention.
And on Wednesday, TechCrunch reported that Amazon seemed to have eased off on the “aggressive marketing of its own private brands” in search results as a result of such scrutiny.
Nevertheless, it’s difficult to imagine US lawmakers agreeing on legislation like the EU’s P2B, which it appears is up for vote this month.