Platform-to-Business (P2B) Regulation: Promoting Fairness and Transparency

With online platforms playing a key role, the digital economy presents small and medium sized enterprises (SMEs) a whole new world of opportunities for growth and insights. Now, and especially in the midst of the Covid-19 pandemic, the pressure to digitise is on, and the way governments deal with platform-to-business relations will shape the future for smaller players in the market.

The Need for Regulation

Around the globe, data asymmetry and winner-take-all dynamics are what concern governments most about online platforms’ potential monopolistic behaviour. In this light, the EU implemented the Regulation (EU) 2019/1150 of the European Parliament and of the Council on promoting fairness and transparency for business users of online intermediation services to promote transparency and fairness between platforms and businesses (P2B regulation).

Key Provisions and Best Practices

In broad strokes, this new regulation promotes transparency by requiring platforms to spell out their terms and conditions and so offer SMEs a clearer idea of the “rules of the game”. The general opinion is that the P2B regulation defines best practices, does not pose a burden for platforms themselves and offers small businesses a channel to address any grievances they may have.

Business Size and Digital Technology Usage

Based on the findings regarding digital transformation, the following correlation exists between business scale and technology adoption:

• 95% of businesses have less than 10 employees.
• Larger businesses are more likely to have a webpage, use social media and sell through e-commerce.
• Small players are often on the low end of the digital transformation spectrum.

Long-Term Effectiveness and Action

However, as the regulation’s main objective is to shape platform behaviour in the long-term, it runs the peril of being ineffective if SMEs and the associations that support them do not exercise their attributed rights. To illustrate how both platforms and SMEs can maximise the benefits, the regulation proposes several lines of action:

• Requiring platforms to spell out their terms and conditions.
• Exercising attributed rights by business users and associations.
• Promoting transparency and fairness between platforms and businesses.