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Thursday, April 26, 2018
EU to Regulate Tech Giants' Online Business Practices, Move to Tackle Online Disinformation

The European Union is adding pressure to tech giants such as Facebook and Google in order to step up their efforts to tackle the spread of fake news online, and also announced rules for companies like Google, Apple and Amazon governing their commercial relations with smaller businesses.

Tackling fake news

Social media can be used as powerful echo chambers for disinformation campaigns, and the European Union says that disinformation harms democracy by hampering the ability of citizens to take informed decisions - it can polarize debates, create or deepen tensions in society and undermine electoral systems, and thus have a wider impact on European security.

The European Commission today proposed a series of measures and self-regulatory tools, such as an EU-wide Code of Practice on Disinformation with the objective of producing measurable effects by October 2018. It also proposes to enhance media literacy, and support of an independent network of fact-checkers and tools to stimulate quality journalism.

Europe expects that online platforms should comply with legal obligations under EU and national law, but also act with appropriate responsibility, given their central role, so as to ensure a safe online environment, protect users from disinformation, and offer users exposure to different views.

The Commission calls upon platforms to decisively step up their efforts to tackle online disinformation. It considers that self-regulation, provided that it is effectively implemented and monitored, can contribute to these efforts.

To this end, the Commission will support the development of an ambitious Code of Practice aiming to achieve the following objectives:

  • Significantly improve the scrutiny of advertisement placements notably in order to reduce revenues for purveyors of disinformation; and restrict targeting options for political advertising;
  • Improve access to trustworthy information.
  • Ensure transparency about sponsored content relating to electoral and policy- making processes;
  • Intensify and demonstrate the effectiveness of efforts to close fake accounts;
  • Facilitate users' assessment of content through indicators of the trustworthiness of content sources and provide easily accessible tools to report disinformation;
  • Establish clear marking systems and rules for bots and ensure their activities cannot be confused with human interactions;
  • Empower users with tools enabling a customized and interactive online experience so as to facilitate content discovery and access to different news sources representing alternative viewpoints;
  • Ensure that new online services include safeguards against disinformation;
  • Provide trusted fact-checking organizations and academia with privacy-compliant access to platform data (notably via application programming interfaces) to enable them to better analyse and monitor disinformation dynamics, and better understand the functioning of algorithms

The Code of Practice should also cover bots by establishing clear marking systems and rules for bots and ensuring their activities cannot be confused with human interactions. Platforms are also expected to intensify and demonstrate the effectiveness of efforts to close fake accounts.

The Commission will assess the implementation of the Code of Practice, in broad consultation with stakeholders and on the basis of key performance indicators. Should the results prove unsatisfactory, the Commission says it may propose further actions, including actions of a regulatory nature.

As a first step, the Commission will support the creation of an independent European network of fact-checkers to establish common working methods, exchange best practices, achieve the broadest possible coverage across the EU, and participate in joint fact-checking and related activities.

As a second step, the Commission will launch a secure European online platform on disinformation to support the network of fact-checkers and relevant academic researchers.

The platform should offer cross-border data collection and analysis tools, as well as access to EU-wide data. This will enable the network members to act as trusted flaggers.

The Code of Practice is also committing online platforms and the advertising industry should also ensure transparency about sponsored content, in particular political and issue-based advertising that could influence public opinion. This should be complemented by repositories where comprehensive information about sponsored content is provided, such as the actual sponsor identity, amounts spent and targeting criteria used.

Regulating tech giants' business practices

The European Commission also proposed new rules for the online platforms providing small businesses with a safety net in the digital economy.

The proposal will have to be approved by the European Parliament and member states before becoming law.

Online search engines and platforms generate the vast majority of internet traffic for big businesses as well as SMEs. However, the European Union says that current position of the online platforms as intermediators of business customer relationships allows them to engage in unfair trading practices that can cause significant economic harm to the businesses that use them.

Moreover, the online visibility of small businesses can depend on their position in search results, whether on online platform intermediaries or in the results of general online searches.

The European Comission's proposed rules aims to establish "a fair, trusted and innovation-driven ecosystem in the online platform economy in the EU and contribute to a strengthened, better-functioning Digital Single Market in terms of innovation, competitiveness, growth and jobs."

The regulation covers online platform intermediaries and general online search engines that provide their services to businesses established in the EU and that offer goods or services to consumers located in the EU. A consumer may, for example, directly subscribe to an online service on a platform (e.g. download an app), she/he may be redirected to the website of an airline, or use a platform to locate a physical restaurant or shop in his/her proximity (e.g. by using Google's My Business).

Such online platform intermediaries include third-party e-commerce market places (e.g. Amazon Marketplace, eBay, Fnac Marketplace etc.), app stores (e.g. Google Play, Apple App Store, Microsoft Store etc.), social media for business (e.g. Facebook pages, Instagram used by makers/artists etc.) and price comparison tools (e.g. Skyscanner, Google Shopping etc.).

The proposal excludes online advertising and payment services that do not intermediate direct transactions between businesses and consumers, as well as intermediaries that operate between businesses only.

The proposal ensures that businesses operating on online intermediation services and general online search engines have greater legal certainty and clarity on what rules govern their relationships with these platforms and how to resolve potential disputes.

Firstly, businesses will be made aware of the principles that affect their ranking position in general online search results or in the search results on a particular online intermediation platform. In the case of online intermediation platforms, this also includes the circumstances under which businesses can influence their ranking position, for example, through payments of additional commissions. Additionally, these businesses will also be informed on how online intermediation platforms treat and rank goods or services offered by themselves compared to other "external" businesses, on the type of data that will be shared with them (i.e. data which businesses or consumers provide when using the online intermediation services), and why they may be restricted from offering goods and services on different conditions through other intermediation platforms.

Secondly, businesses will also now have clarity on when their use of an online intermediation platform can be suspended or terminated, including delisting and removing of goods and services from search results. They will also be informed about the reasons should a platform decide to do so.

Finally, the regulation also provides quick means to resolve disputes between businesses and online platform intermediaries. This includes for online platform intermediaries the obligation to establish internal complaints handling systems by the larger platforms or through mediation in the cases of smaller enterprises. In addition, in cases of court disputes, the proposed regulation now enables businesses to be represented by associations or organizations in cases against online platform intermediaries or online search engines with the requirements of the Regulation.

The European Commission will set up a group of experts that, together with a dedicated team of Commission officials, to form the EU Observatory of the online platform economy. The group will be composed of independent experts in the field of the online platform economy who will be selected through a public call for applications. The group will meet at least four times a year and provide the Commission with advice and expertise on the evolution of the online platform economy.

It will monitor market trends and opportunities and the evolution of potentially harmful practices as well as the development of national policy and regulatory approaches. Its work will focus on issues such as algorithmic decision-making and ranking, data access and use, remuneration of material displayed online, business-to-business commercial relations in online advertising, alleged discriminatory practices of service providers towards users and restrictions on users to offer different conditions on other distribution channels.

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