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French “platform” regime: The saga continues after the adoption by the French Senate of the Digital Bill

BXP25363h_mainOn 3 May 2016, the French Senate adopted a new version of the French Digital Bill.  Below is what you should know about it, bearing in mind that this saga is not over yet as the Bill will now have to be reviewed by a Joint Committee composed of Senators and Deputies, in the next coming weeks.

The definition of operators of online platforms overall remains the same.  The Senate merely reiterated that the purpose of this provision is not to create a third category of intermediaries but to suggest a regime that would be added to the editor and hosting provider regimes.  Regarding price comparison websites, they will eventually be covered by the definition of platforms as the specific Article of the French Consumers Code governing them will be deleted.

If the definition of the platforms has almost not been modified, the Senators on the contrary substantially developed the obligations lying on them.

  1. Main innovation: automatic secured declaration of income by online platforms

The Senate voted the insertion in the French Tax Code of a new Article compelling online platforms to send to the French Tax Authorities a declaration mentioning, for each of their users deemed to pay taxes in France, the following information:

  • for natural persons: first name, surname and date of birth;
  • for legal persons: corporate name, registered address and siren number;
  • electronic address;
  • status of professional or individual of the user on the platform;
  • total gross income perceived by the user during the civil year for its activities on the platform;
  • category of the gross income at stake;
  • any other information as specified by an implementing Decree.

The platform will have to send this declaration once a year by email to the Tax Authorities and to the user.  This Article is intended to inform French Tax Authorities of the income French taxpayers receive when they use platforms (sale of goods, rent of cars, flats etc.).  The Senate created as well a lump-sum exemption of 5,000 Euros on the turnover made by individuals through the use of platforms.

As this declaration will have to be sent annually to the Tax Authorities for each user deemed to be liable to pay taxes in France, this is likely to be very burdensome for operators of online platforms.

2. Loyalty obligation: deletion of the “explicit labelling” requirement

The loyalty obligation remains.  Platforms will have a duty to “clearly show the existence of a contractual relationship with the legal person which is referenced, of a capitalistic link, or of any remuneration in its favour if they influence the classification or the referencing of the goods, contents and services offered“.

The Senate deleted the reference to the “direct” nature of the remuneration as it considered that any remuneration should clearly appear, whether it is direct or indirect.  In addition, the specific impact of the remuneration on the classification will not have to be detailed anymore.

The Senators deleted as well the obligation for the contractual and capitalistic relationships or the remuneration to appear through an “explicit labelling“.  The Senators considered that the use of pictograms would unduly complicate the information to be given to consumers.

Finally, the details of the information to be provided to the consumer will not anymore have to take the form of a generic and intelligible description in the general conditions of use of the online platform.

3. New obligation to provide information in B to C relationships

The Senators created a new obligation applying to operators of online platforms whose activity consists in putting in relation consumers with professionals or with non-professionals to provide clear, loyal and transparent information on the fact that one of the parties is an advertiser on the platform and on the rights and obligations of the parties in civil and tax matters.

This obligation currently exists but only for platforms putting in relation consumers with consumers.  The Senators decided to extend this obligation to business to consumer relationships, despite the opposition of the French Government.

4. New obligation to provide information in B to B relationships

The French Senate adopted a new Article aiming at including in the section of the French Commercial Code dedicated to transparency a new provision compelling operators of online platforms exceeding a certain threshold of connections (to be determined by a Decree) to clearly indicate any substantial modification of their terms of use, of the terms of referencing, classification and delisting of content, goods or services to which their service enable to access and, as the case may be, to the terms of access to their programming interface, in a reasonable delay and prior to such modification. Any breach of this obligation shall be punishable by a fine of 75,000 Euros.

The Senators who proposed the inclusion of this new Article explained that it is aimed at protecting business users of major platforms which can be adversely affected by modifications of the terms of use of the platform or the ways in which content, goods or services are classified or referenced.

Both the Government and the Law Commission of the Senate expressed their opposition to the inclusion of such an obligation which would be applicable solely between professionals.

5. New duty of diligence of platforms to fight counterfeiting

The provision imposing self-regulation obligations on online platform operators exceeding a threshold of internet connections has been kept.

The Senate deleted the additional obligations applying to platforms through which illicit content is likely to be broadcast to French consumers on a large scale.  For instance, platforms will no longer have an obligation to implement technical devices allowing an automatic recognition of illicit content.  These platforms will not anymore have to designate a legal representative in France and to elaborate good practices to fight such illicit content being made available on their platforms.

Yet, these obligations have been replaced by another one.  Despite the opposition of the French Government and of the law Commission, the French Senate introduced a new obligation, applicable notwithstanding more restrictive legal or regulatory provisions, compelling operators of online platforms to act with diligence and to take all reasonable, adequate and proactive measures in order to protect consumers and intellectual property right owners against the promotion, the marketing and the broadcasting of counterfeit products and contents.  This new obligation shall be applicable from 1st January 2018.

To conclude, given the fact that the French Government disagreed with most of the new obligations included in the Digital Bill by the Senators, there is little doubt that the negotiations taking place between Senators and Deputies during the Joint Committee session are going to be tough.