How will marketplace startups in the EU deal with new platform rules?
There are about 10,000 startup platforms in the EU, many of which are online marketplaces. The Digital Services Act has the potential to empower these to launch their businesses and scale in the EU, if it preserves the founding principles of the platform economy and gives entrepreneurs legal clarity.
As the discussions are underway in the EU legislative bodies, namely the European Parliament and the Council of the EU, two key issues are emerging for marketplaces: the scope and the liability regime. EU policymakers are considering placing a liability obligation on marketplaces, a derogation of a key principle of the E-Commerce Directive.
Here are 3 amazing EU marketplaces and our first take at how these provisions will affect them:
Safer marketplaces for European consumers. Geev is an French online platform combating waste by helping people in need to find cheap or free food or items such as furniture or household appliances. Geev likely falls under the scope of a “marketplace” definition in the DSA, and will therefore become liable for the items or food posted on its platform. Making Geev liable for its services will only be to the detriment of consumers, as Geev might need to restrict its donation service if it becomes too risky. The lack of legal certainty will likely discourage startups like Geev from offering their innovative services to EU consumers.
A new liability obligation on marketplaces. Rohlik is a Czech online supermarket. As any supermarket, Rohlik makes sure that the items sold on its website are secure, edible and has implemented robust safeguards and guarantee measures. As with any marketplace, it can happen that products have to be recalled for one of several reasons. On the principle that what is illegal offline should be illegal online, the liability burden should not weigh more on online supermarkets, as they are an intermediary and do not control the products of their suppliers. Making Rohlik liable would add obligations and end up making it harder for small local sellers.
Traders that can be traced. GoStudent, an Austrian tutoring platform implemented tailored measures to make sure its services are safe for its student users. On GoStudent, each tutors’ degree and skills are verified. Implementing the traceability of traders, with the provisions that it requires such as a self-certification to offer products could be more of a struggle than anything, as tutors do not qualify as traders.
Startup marketplaces all have a vested interest in ensuring their consumers are not misled and their business users are reliable. Making them bear the risk of being liable for the services or products they offer would ultimately undermine the potential for startup innovation in the Digital Single Market. This is why we suggest designing clear, technology-neutral due diligence obligations and not tie them with the liability exemption regime. We also recommend clarifying the definition and the scope of a marketplace. Ultimately these suggestions will support marketplace startups to do what is in their interest – ensuring a smooth user experience – and allow them to flourish in the EU.
This blogpost is the first of a series on the impact of the current amendments of the Digital Services Act on startups ecosystems in the EU.