At a Glance
As part of the European Digital Strategy, European institutions are considering changes to the Digital Services Act (DSA) that aim to reinforce the Single Market for digital services and clarify their responsibilities with regards to online content moderation. eBay welcomes the European Commission’s DSA proposal that represents a horizontal, proportionate, and balanced approach to tackle illegal content online. However, sector-specific amendments proposed by policymakers take this legislation in a different direction, which could have unintended negative consequences for certain online business models and ultimately hurt the European small businesses we host.
While considerations around the role and responsibilities of marketplaces are important, new obligations should be proportionate and workable, in order to avoid creating negative consequences for millions of European businesses and consumers that use online marketplaces like eBay:
Issue in Detail
The e-Commerce Directive (ECD) principles, adopted in 2000, set up the basic legal framework for information society services and provide the backbone for a dynamic European digital single market, essential for eBay users to thrive. The directive recognizes the opportunities e-commerce provides for consumers and businesses, especially Small and Medium Enterprises (SMEs), and it continues to play an essential role for the growth and continued evolution of the European online economy.
eBay, with its open third-party marketplace business model, enables hundreds of thousands of SMEs who want to grow their business by reaching new markets around the world. eBay is the platform of choice for cross-border trade, thus strengthening the European Digital Single Market.
eBay understands and supports the need to reinforce a regulatory framework that would further improve consumer trust and protection. The European Commission’s DSA draft proposal of December 2020 is a relatively well-balanced piece of legislation which has reasonable expectations of platforms, including online marketplaces, in the way they fight against illegal content on their sites.
However, some of the amendments proposed in the European Council and in the European Parliament would impose far-reaching due diligence obligations and a disproportionate liability regime specific to marketplaces, separate from that of other online intermediaries, that would affect every seller who wishes to use a marketplace to sell online in Europe.
As a result, eBay urges policymakers to seriously reconsider their Digital Services Act reform and to defend the rights of European small businesses to use online marketplaces by implementing the following recommendations:
1. Avoid obligations to pre-filter listings
Obliging marketplaces to check each and every product offered for sale for completeness or accuracy, ahead of its publication, is an impossible task for a pure third-party marketplace like eBay, which never takes direct control of merchandise, but instead connects sellers and buyers to enable the purchase of items.
Such an obligation would have a chilling impact, encouraging marketplaces to limit offers, including for unique, handmade or customized products.
Finally, these checks do not exist offline and would turn the marketplace into a private regulator. The marketplace would be forced to impose huge bottlenecks to small sellers and make them wait for long periods of time ahead of the publication of their listings, hereby reducing their competitiveness against large retailers who sell on their own site, where such checks would not exist.
2. Maintain existing marketplace responsibility
If marketplaces become liable for each product listed, they will be forced to block legitimate sellers for even the slightest involuntary mistake. Furthermore, strict legal deadlines for content removal and a requirement to ensure content does not reappear would force marketplaces to implement more filters and stricter policies.
On the other hand, dominant players that store their own products and control logistics may be the only ones with the resources and power able to comply. European sellers will be forced to surrender their business independence to these dominant platforms, reinforcing their gatekeeper position.
3. Ensure a balanced and risk-based know-your-customer regime
eBay already support and comply with existing data collection, verification and disclosure requirements under applicable legislation, such as for combating tax fraud (DAC 7 Directive) or money laundering (Anti-Money Laundering Directive and Transfer of Funds Regulation).
These existing know-your-customer regimes all follow a set of important principles, including a risk-based approach and the minimization of data to be collected and stored to achieve their purpose. In order to ensure a consistent user experience, the KYBC provision in the DSA should be as aligned as possible with existing legislation and follow the same principles.
For example, we suggest aligning the reporting requirements with those in the DAC 7 Directive, which provides for a 2000 EUR or 30 transactions in a year threshold. Absent such a threshold or simplified procedure, the marketplace would be forced to collect a large amount of sensitive personal information at onboarding, a moment when our sellers may be easily discouraged from opening a shop or transaction at all. This is particularly important in a Covid recovery context where many European SMEs are testing online marketplaces for the first time as a trading option and might be deterred by excessive data collection and red tape upon signing up.
As a result, new and occasional sellers should continue to benefit from a simple marketplace registration process, until they reach a certain level of sales. Rules must recognize and encourage the fact that online sellers grow into small businesses gradually.
4. Respect privacy
Sellers should not be forced to provide marketplaces with sensitive data, such as passport scans, until needed for reasonable regulatory reasons. In fact, in standard KYC practices, a copy of identification document is not a piece of data to collect, but rather a method of verification. Document collection is most often a means of last resort, only where the marketplace is unable to verify the identity of the seller by other means. It should therefore not be collected systematically, consistent with the GDPR’s data minimization principle.
Furthermore, marketplaces should not be obliged to publish information that may compromise their sellers’ privacy and safety, such as a home office address. Many sellers are businesses of one, working out of their own homes, and disclosing their personal information is undoubtedly privacy invasive. In such specific circumstances, we therefore suggest allowing the possibility to disclose information such as the trader's name and address in line with the Omnibus Directive, which refers to the ‘trading name’ and ‘the geographical address at which the trader is established’.
5. Protect sellers from abusive notices
If the marketplace becomes liable when any person, who considers a listing to be infringing or even inaccurate, sends a notice regarding said listing, sellers will become vulnerable to abuse of the notice system. As a result, they may be victims of unfounded claims from competitors or unhappy customers to get their listings removed, exposing them to unnecessary financial loss.
In fact, an efficient notice & action system should be based on adequate prioritization and safeguards against abuse. In other words, the power for a marketplace like eBay to both deal efficiently with a high volume of notices and discard unfounded ones is the prerequisite for effective content moderation on our platform.
If this is not achieved, the platform may become less efficient to fight against the real bad players because abusive notices will misdirect and stretch their resources.
6. Support competition among marketplaces
Disproportionate obligations may force marketplaces to raise their service fees to compensate for new compliance costs, directly hurting sellers.
Meanwhile, dominant players that store their own products and control logistics will be placed at an advantage over the vast number of European small sellers.
Furthermore, e‐commerce may likely shift to social media: these channels would remain outside of the new rules. European consumers using them will receive no protection and will be unable to seek redress from sellers, while law-abiding European SMEs will suffer from this unfair competition.