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Interim results published of consultation with business customers of digital platforms

Jochen Homann: "New economic approach for digital platforms -strengthening business customers’ competitive position in
e-commerce"

Year of issue 2020
date of issue 2020.10.20

The Bundesnetzagentur has today published initial results of an ongoing consultation about the importance of digital platforms for business customers in Germany.

"Business customers, especially small and medium-size enterprises, report of competition restraints through digital platform operators. Because of this, we propose strengthening the position of business customers through a new regulatory approach for digital platforms. Abuse of market power should be prevented before it takes place. Once the damage has been done, it’s too late," said Jochen Homann, Bundesnetzagentur President.

Digital platforms very important for business customers

The Bundesnetzagentur is giving business customers the opportunity to report on their experience doing business via digital platforms in Germany. Initial responses show that the majority of the participants consider both marketing activities and sales activities via digital platforms to be significant. Nearly three quarters would see themselves having considerable difficulties competing successfully in the German market without the use of digital platforms.

At the same time, however, the companies report experiencing various difficulties with digital platforms. These have mostly to do with complaints management, dealing with customer and product ratings, commissions and fees, and the dual role of the platform operator as operator of the platform and at the same time provider on their own platform. The customer experience reports to date focus mainly on e-commerce platforms.

Need for new regulatory framework for digital platforms

As part of various initiatives, efforts are currently being undertaken by the European Commission to deal more strictly with digital platforms in Europe.

In this context the Bundesnetzagentur is proposing the introduction of a new European regulatory framework for digital platforms with significant intermediation power. This framework should prevent harmful practices – such as discrimination – before any harm occurs. Such an ex ante regulatory approach can work quickly, efficiently and extensively towards solving problems. Timely remedial measures are especially crucial for smaller companies.

A combination of directly applicable rules of conduct such as non-discrimination and additional tailored remedial measures – ordering access to certain data in a way that conforms to data protection regulations, for instance – make sense as regulatory instruments. This should be accompanied by continuous monitoring and regulatory enforcement.

The Bundesnetzagentur has extensive experience that can be channelled into regulation of digital platforms in the future. In the areas of net neutrality, roaming and geo-blocking, the Bundesnetzagentur already successfully applies similar approaches to those that appear to be necessary with digital platforms. General and sector-specific competition law can thereby supplement each other in a reasonable way.

The Bundesnetzagentur’s ongoing consultation

The Bundesnetzagentur is giving business customers the opportunity to report on their experience doing business via digital platforms in Germany. Between March and August 2020, a total of more than 200 companies reported their experience in the areas of marketing and sales. The majority of the consultation participants are small and medium-size enterprises active throughout Germany or the EU. The consultation came about due to ripple effects of digital platforms that could be observed in sectors regulated by the Bundesnetzagentur.

The consultation focuses on e-commerce and comparison platforms, app stores, search engines and B2B platforms, to name a few.

The insights provided by the participants help to assess how to quickly and efficiently address business customers’ difficulties. The Bundesnetzagentur’s work in this area is not finished, and it continues to rely on obtaining comprehensive information to get an exhaustive overview.

Digital platforms as a backdrop

As intermediaries, digital platforms play a key facilitator role between various platform users. Particularly for business customers, intermediation power can result in heavy dependence on digital platforms.

This is because of network effects that tend to bring about a concentration that benefits certain platforms. Some of these companies have succeeded in gathering, linking and analysing so much data that entire ecosystems could be established. As a result, they form central interfaces within various value-added chains. Once the users are dependent, platforms can more or less autonomously create their own rules to play by and use their negotiating power to define the terms and conditions.

Business customers can still participate in the consultation at www.bundesnetzagentur.de/digitalisierung-konsultation.

Press release (pdf / 171 KB)