Big Tech Companies Could Face More Rules in the EU -- 2nd Update
Tech companies in Europe face the prospect of more rules dictating how they conduct business.
The European Union's executive body is considering new rules that would prevent web platforms, such as Alphabet Inc.'s Google, Amazon.com Inc. and TripAdvisor Inc., from offering unfair terms to small businesses that use their services to sell or promote products.
The European Commission on Wednesday said it wants to address complaints by businesses about unilateral contract changes, lack of access to essential sales and customer data and poor transparency regarding companies' rankings in search results. Companies also lack possibilities for redress to resolve disputes, the EU said.
"It's quite clear to us that the platforms are gatekeepers and in the business-to-business relationships there are a certain number of problems," said Jörgen Gren, a senior EU official involved in the initiative.
The commission said it would carry out detailed analysis to decide by year-end whether new legislation is needed. Brussels initially flagged the concerns of businesses about transparency on platforms last May.
When tackling problems of transparency with search results, the EU said it wouldn't necessarily require platforms to divulge the inner-workings of their algorithms but that the topic would be discussed as the commission conducts its analysis. The commission will also explore whether paying providers are ranked higher in search results than others, an EU official said.
Search rankings are at the heart of one of the cases by the commission's competition directorate against Google, which Brussels accuses of skewing results to preference its own comparison shopping service over that of rivals. Google denies the charges.
The plan to further scrutinize web platforms' operations comes as part of the commission's midterm review of its Digital Single Market project, through which the EU aims to translate its single market in goods and services among its 28 member states into the online space. The project entails more than a dozen legislative and other initiatives, such as harmonizing the bloc's data protection rules and ensuring consumers can shop across borders online.
The commission's deliberations highlight ongoing concerns in top European policy circles about the power of U.S. technology companies, which had sparked a flurry of investigations, including the three separate EU antitrust probes into Google. Both Brussels and national capitals are cracking down on how tech companies operate here regarding issues such as data privacy, copyrights and taxes.
At the same time, the commission is eager to promote small businesses and entrepreneurs at a time when the bloc is still suffering from a generally weak job market. Seeking to create jobs, the commission has encouraged the growth of the so-called sharing economy--platforms like Uber Technologies Inc. that link service providers to consumers.
Associations representing large American tech companies said they were dismayed by the commission's plans for platform rules.
"We believe there's not enough of a basis for general intervention and that the European Commission should use other instruments when there's market failure," said James Waterworth, vice president for Europe at the U.S.-based Computer & Communications Industry Association, a lobby group that represents Facebook Inc. and Google.
EDiMA, a European trade association representing online platforms such as TripAdvisor and Apple Inc., said it was "disappointed and astounded" at the announcement.
The EU on Wednesday said it would also in the coming months publish guidance to encourage technology firms to more quickly remove hate speech and extremist rhetoric from their platforms.
The commission says it has no plans to propose concrete legislation in the area, but rather wants to clarify minimum requirements for takedown procedures, such as whether a form of acknowledgment of receipt by the platform is needed when a user flags content.
Internet companies have faced increased pressure from authorities to accelerate removal of terrorist content and hate speech after a number of deadly terror attacks in Europe in recent months.
The companies already try to remove illegal information when it is reported, but face criticism they don't do so rapidly enough or take enough of the content down. The tech firms say they are wary of initiatives that infringe on freedom of expression.
Separately, the commission's competition directorate published the findings of its two-year long probe into the e-commerce sector. The EU reiterated warnings that consumer-product makers and digital content owners could face antitrust probes for restricting the way retailers sell the companies' goods online.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
May 10, 2017 10:32 ET (14:32 GMT)