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Global Media and Communications Watch The International Legal Blog for the Tech, Media and Telecoms Industry
Posted in Internet, Policy & Regulation Winston Maxwell

French initiative to regulate digital platforms

1On February 17, 2015, France’s telecommunications regulator, ARCEP, voiced support for imposing a duty of fairness on digital platforms, with additional regulatory obligations to be imposed on so-called “major” platforms. As discussed below, because many key questions remain unanswered, it would be prudent for companies operating in this space to continue monitoring for new developments.

As background the ARCEP’s opinion was expressed in the context of a public consultation launched by the National Digital Council on reform of French law applicable to the digital economy. Several French institutions have called for a new regulatory framework to regulate the behavior of so-called “platforms.” For example, the National Digital Council has called for a rule imposing neutrality on platforms. A Senate report in March 2013 suggested that certain platforms be considered as “essential facilities” with guaranteed access rights. The French Council of State issued an influential report in September 2014 calling for a new law that would impose a duty of fairness on digital platforms. Now the ARCEP has voiced its support not only for a duty of fairness to be imposed on all platforms, but for enhanced regulatory obligations to apply to “major” platforms.

Imposing a duty of fairness on platforms is intended to address fears that platforms will apply hidden or misleading criteria when they organize content for consumers, thereby limiting consumers’ freedom of choice, as well as hurting upstream content providers whose services may be discriminated against.  Like net neutrality, a duty of fairness may sound like a good idea in the abstract. However, as we know from the net neutrality debate, the devil is in the detail.

For example, one of the most significant details that would have to be worked out is: what exactly is a platform? The Council of State proposes the following definition: “services that reference or classify content, goods or services published or provided by third parties, and shared on the site of the platform.” But this definition covers a multitude of heterogeneous services that often fall under separate pre-existing legal regimes.

The second question is what is a “major” platform? All we know for the moment is that a “major” platform may not be the same thing as a platform with a dominant position under competition law. Both the ARCEP, the National Digital Council and the March 2013 Senate report claim that competition law is not sufficient to deal with abuses committed by major platforms. The Senate report recommends treating certain platforms as “essential facilities.” The National Digital Council’s report calls for a rethinking of the concept of “dominant position” and “essential facilities.”  The September Council of State report takes a more reserved approach, stating that the “essential facilities” doctrine is unlikely to apply to platforms, and that defining certain platforms as dominant and subjecting them to ex ante obligations is likely to be difficult given the speed of technological change.

A third question relates to what would be included in the duty of fairness. France’s consumer code already contains a general prohibition of “unfair” commercial practices. This general principle has been applied in a number of contexts, including to digital platforms. It is unclear how the new digital duty of fairness would differ from the general duty of fairness that already exists under French law. What we do know is that the duty of fairness is probably not going to be a duty of neutrality. The Council of State said that the idea of imposing neutrality on digital platforms was absurd, because digital platforms exist precisely for the purpose of organizing content. Therefore transposing net neutrality rules to digital platforms makes no sense. We also know that the duty of fairness will contain certain transparency obligations, including an obligation to explain to users the criteria used by the platform to select content and services, and an obligation not to have hidden anticompetitive criteria such as favoring the platform’s own content or services over those of its competitors. This aspect of fairness sounds remarkably like competition law. There again, one can ask why existing competition law is not already sufficient to deal with the problem. One version of the duty of fairness would impose a form of must-carry obligation on platforms as if they were an essential facility. The proponents of this extreme version of the fairness obligation would apply this obligation only to so-called “major” platforms.

The last uncertainty is whether France can make these reforms under existing EU directives, or whether the E-Commerce Directive would first have to be modified. Under the E-Commerce Directive’s country of origin rule, member states are not supposed to impose additional obligations on information society services that are legally established in another member state. Moreover, the E-Commerce Directive defines limited categories of Internet intermediaries, and it is unclear if member states are free to create new categories.

France’s new digital rights bill is not likely to be tabled until the second half of 2015. Between now and then, perhaps some of these questions will be clarified.