Online Service Providers – Have You Already Updated Your Terms and Conditions?

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If you are a start-up or established business providing online intermediation services or offering a search engine for business and corporate website users in the European Union, then you might have to update your terms and conditions because of a new EU Regulation. The Regulation on promoting fairness and transparency for business users of online intermediation services, which enters into effect on 12 July 2020, applies to businesses both in and outside the EU. The Regulation sets out several obligations for service providers, including requirements with regard to the terms and conditions of the service provider.

Find out in our blog whether the Regulation applies to you and how you will have to change your terms and conditions.

To whom does the Regulation apply?

The Regulation applies to online intermediation services and search engines providing services to business and corporate users established in the EU if these businesses offer goods or services to consumers located in the EU.

Online intermediation services” in this context means:

  1. information society services, meaning any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services;
  2. that allow business users to offer goods or services to consumers, to facilitate the initiating of direct transactions between those business users and consumers irrespective of where those transactions are ultimately concluded; and
  3. the provision of these services to business users is based on a contractual relationship between the provider of the services and the business user.

Examples of such online intermediation services likely include online e-commerce market places (including collaborative marketplaces on which business users are active), online software applications services (e.g. app stores, online social media services) and possibly also online intermediation services provided through voice assistant technology.

The term “online search engine” covers digital services that allow users to input queries to perform a search of, in principle, all websites, or all websites in a particular language, based on a query on any subject in the form of a keyword, voice request, phrase or other input, and returns results in any format in which information related to the requested content may be found.

Why does the Regulation apply to Swiss businesses?

As online intermediation services and online search engines typically have a global dimension, the Regulation provides that it applies to service providers regardless of whether they are established in an EU member state or outside of the EU. Notwithstanding this, the Regulation limits this with two requirements that have to be met.

  1. The business users of the online intermediation services or search engine or corporate website users must be established in the EU or the EEA.
  2. The business users or corporate website users must offer goods or services to consumers located in the Union.

What do I have to include in my terms and conditions?

Some of the key obligations with which online intermediation services and search engine providers covered by the Regulation have to abide by are the following requirements for their terms and conditions.

As a minimum, the following points need to be included in the terms and conditions.

  • A 15-day minimum notice period for changes to the terms and conditions and a right for business users to terminate the contract if they do not agree to the proposed changes;
  • A 30-day minimum notice period for terminating the contract accompanied by reasons why the online service provider is taking such action;
  • Information on the business user’s right to terminate the contract;
  • An indication regarding the availability of other channels for sales of the business user’s goods and services;
  • An explanation about the impact that the contract has on the business user’s ownership and control of their intellectual property rights;
  • A description of the access to personal and other data provided or generated by the business user after the expiry of the contract;
  • Details of at least two mediators that can be used to settle disputes between the online service provider and the business user.

Besides the above necessary content, the terms and conditions have to be easily available to all business users at any stage of their relationship with the online intermediation services or search engine provider and have to be drafted in a plain and intelligible language.

If you are unsure whether you have to update your terms and conditions because of the new Regulation, please reach out to us. We would be happy to discuss the possible application of this Regulation to you and your business or start-up idea.

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