The rise of the platform economy

Online platforms have transformed the way we shop, travel, socialise, learn and work. These transformations have happened rapidly and the expansion of the platform economy shows no signs of slowing down. 

There are clear benefits to platforms that allow consumers to compare prices, travel more conveniently, find work, learn new skills and connect with people they would otherwise not meet. There are also many political and regulatory issues that arise from the advent of platforms, such as their impact on businesses and individuals who use the platform, ensuring consumer rights are upheld, dealing with illegal content, how taxes should be levied, how competition law should be applied, and compliance with local laws and standards.

With regulatory developments expected in the EU and many member states, 2019 is likely to be a critical year for the development of online platforms in Europe.

A regulatory priority in the EU and the UK

Having previously paid less attention to online platforms, EU policymakers are now laying the foundations for a more definitive approach to regulating this growing sector of the economy.

In April 2018, the European Commission proposed the ‘Platforms-to-Business Regulation’, targeting a number of concerns with how the platform economy operates. 2018 also saw significant pressure from EU policymakers on platforms around illegal content and consumer protection.

In the UK, there has been a similar focus on consumer rights and illegal content. The Competition and Markets Authority has undertaken a number of market studies and investigations targeting specific types of platforms including price comparison and hotel booking sites.

Tax and competition

In the EU and in many Members States, including the UK, there are proposals for new 'digital services taxes', which are firmly aimed at large platforms. Each of the proposals is slightly different, but all are based on taxing revenue rather than profits. While every country professes to want to see a global approach agreed at the OECD, it is more than likely that some of these proposals will become law before international agreements can be negotiated.

Similarly there are a number of early stage reviews and investigations into how competition law should operate and be applied in digital markets. The issues of applying existing competition law to online platforms are manifest and increasingly politicians across Europe are calling for more radical approaches. 

Time to engage

Further regulation and political pressure on platform operators is inevitable. Both large and small players will need to engage with the policy making process if they are to ensure that regulatory approaches are appropriate and do not harm their business models.  

If you would like to be kept up to date on the regulation of the platform economy and how you can influence the debate then please get in touch.

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