Amazon, Etsy and Booking.com all named in leaked document as having undue power over their markets

EU warns of 'point of no return' if internet firms are not regulated soon

The European Union is considering the creation of a new regulator with the explicit remit to oversee internet firms such as Google and Facebook, according to a leaked internal document prepared in February.

The plan, seen by the Wall Street Journal, was prepared for EU digital commissioner Günther Oettinger, and warns that some digital businesses “are transforming into super-nodes that can be of systemic importance” for the rest of the economy. “Only a very limited part of the economy will not depend on them in the near future,” it argues.

A lack of action, it warns, “may lead to a point of no return”, where the economy becomes irrevocably tied to a few major companies.

It gives, as examples, online retailers such as Amazon and Etsy, who retain the power to exclude companies from their listings due to a suspected breach of terms and conditions, without having to provide any evidence of the breach. “Contesting this decision is lengthy and burdensome,” it points out.

It also highlights TripAdvisor and Dutch website booking.com as firms who exercise undue power over their market sector. They are the “main entry point” to the travel sector and are “able to charge fees with full discretion”.

As a result of the massive reliance on these firms by other sectors of the economy, they could potentially put “the whole European economy at risk” by exploiting their market power unfairly. To prevent this, the paper argues for a new “supervision framework”, which could include things like a ban on “unfair” practices, and a requirement that the internet companies not use their platforms to provide preferential treatment to their own services.

Additionally, it suggests that platform holders should have a greater requirement to offer interoperability to users, making it easier to switch between service providers. The rules would be overseen by an “EU-wide body”, according to WSJ.

The document also highlights the fact that closed platforms are already hurting EU companies. “While EU app developers account for 42% of the global consumer app revenue, the overall EU trade balance of the app economy is negative (€128m [£92m]), mostly due to the app platform fees that EU developers pay on revenue earned to North American platform owners,” it says.

Despite the recent announcement of an EU antitrust case against Google, which is accused of unfairly using its monopoly in search to boost its online shopping product, the paper says that competition law isn’t the right way to enforce fairness, since the cases are “lengthy and expensive”.