Online Platforms and the Digital Single Market Contents

Online Platforms and the Digital Single Market

Chapter 1: Introduction

1.The term ‘online platforms’ describes a broad category of digital businesses that provide a meeting place for two or more different groups of users over the Internet. Examples include search engines, online marketplaces, the collaborative or sharing economy, and social networks.

2.In May 2015 the European Commission published its ‘Digital Single Market Strategy for Europe’, outlining 16 legislative and non-legislative initiatives designed to create a single market in digital goods and services across the European Union.1 As part of this Strategy, the Commission drew attention to online platforms as “playing an ever more central role in social and economic life: they enable consumers to find online information and businesses to exploit the advantages of e-commerce.”

3.The Commission also noted that: “Some online platforms have evolved to become players competing in many sectors of the economy and the way they use their market power raises a number of issues that warrant further analysis beyond the application of competition law in specific cases.”2 In order to explore these concerns, the Commission proposed:

“A comprehensive assessment of the role of platforms … which will cover issues such as (i) transparency e.g. in search results (involving paid for links and/or advertisement), (ii) platforms’ usage of the information they collect, (iii) relations between platforms and suppliers, (iv) constraints on the ability of individuals and businesses to move from one platform to another and will analyse, (v) how best to tackle illegal content on the Internet.”3

4.On 24 September 2015 the Commission launched its consultation, entitled ‘A fit for purpose regulatory environment for platforms and intermediaries’, to gather evidence on these concerns.4 A key part of the Commission’s investigation centred on the question of whether, beyond the existing regulatory framework, new regulation for online platforms should be introduced.

5.While we recognise that a single report cannot comprehensively cover such a broad and complex policy area, our inquiry has sought to provide clarity by separating out the distinct policy questions that relate to online platforms. We have considered the merits of defining such a diverse range of businesses as ‘online platforms’ for the purposes of regulation. We have considered how the economics of multi-sided platforms affect the competitive dynamics of these markets. We have evaluated the extent to which existing regulation, including competition, data protection and consumer protection law, can address the Commission’s concerns, and whether these regimes need to be updated. We have taken evidence from a wide range of businesses, academics and national and European regulators working in these fields.

6.To avoid over-extending the inquiry we excluded questions of copyright, illegal content and corporate tax payments from the outset. Early on in our inquiry the Commission announced that it would be clarifying how existing law applied to collaborative economy platforms as part of its Single Market Strategy—a sensible first step, in our view—so we have not sought to address this question.

7.Our Call for Evidence did not seek to address the implications of a vote to leave the EU for the UK’s involvement in the Digital Single Market. What is clear is that the Digital Single Market could bring huge benefits to the UK economy in particular, and that securing continued access to that single market in the event of a vote to leave would require a lengthy and complex negotiation between the UK and the other 27 Member States. We have decided not to speculate on what are at this stage hypothetical risks and opportunities.

8.In line with the ambition to create a Digital Single Market, we have also investigated what measures are needed to enable European online platforms to maximise their growth potential and compete at a global level. Our visit to the Digital Catapult Centre, where we met a number of start-ups and businesses seeking to scale-up their operations, demonstrated the enormous potential for growth in this sector as well as the many challenges businesses face in making that transition.

9.We received 85 written responses to our Call for Evidence and held 20 oral evidence sessions. We would like to thank all those witnesses who appeared before us, or who submitted written evidence, for their significant contribution to this report. We are also grateful to Richard Feasey and Derek McAuley who acted as Specialist Advisors to this inquiry.

10.We make this report to the House for debate.

1 Communication from the Commission, A Digital Single Market Strategy for Europe, COM(2015) 192

2 Communication from the Commission, A Digital Single Market Strategy for Europe, COM(2015) 192, p 11

3 Communication from the Commission, A Digital Single Market Strategy for Europe, COM(2015) 192, p 12

4 European Commission, ‘Public Consultation on the regulatory environment for platforms, online intermediaries, data and cloud computing and the collaborative economy’ (September 2015): [accessed 23 February 2016]

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