American tech and retail giants – Google, Apple and Amazon – face new European Union regulations on their business practices with smaller businesses that use their services. As Brussels seeks to tame their huge market power, the European Commission is drafting a new set of rules specifically targeting apps, e-commerce platforms and search engines.
The new rules will require these firms to be more transparent about how they rank search results and why they sometimes de-list some services. The proposal aims to address potential undesirable commercial practices by online platforms and a lack of an effective mechanism for the protection of smaller businesses. “Online intermediation services can hold superior bargaining power over their business users, enabling them to behave unilaterally in a way that is capable of harming the businesses using them,” the draft regulation says.
The proposal initially aimed to exclude search engines such as Google and Microsoft’s Bing but they are now also part of it. Tech companies have been a common target of the EU over the way they handle their user data and how much they pay in taxes. This new wave of regulatory pressure will make the tech companies specify in advance the “most important parameters determining ranking”, such as “specific signals incorporated into algorithms” and adjustment or demotion mechanisms.
The proposal will not make companies reveal their exact algorithms but just provide general descriptions explaining “how and to what extent the relevant ranking mechanism takes account of the quality of the products and services offered”. The companies will also have to introduce a notice period of 15 days for changes to the conditions as well as provide small enterprises with custom description of the reasons for which they are de-listed from their services.