In a considerable victory in its battle to clamp down on fraud and illegal trade on the internet, the European Commission (EC) recently announced that it has secured agreements from Canadian eCommerce tech giant Shopify to help ensure that its platform users comply with European Union law.
In a statement announcing the arrangement, the EC stated that it first entered into a discussion with Shopify following a number of complaints to European Consumer Centers, which peaked during the COVID-19 pandemic. The complaints related to online stores hosted on the platform engaging in illegal practices such as making false claims, selling counterfeit goods and not providing their contact details.
See more: EU Parliament Calls For More Consumer Protection In AI, Automation
In the U.S., Shopify’s liability for items sold via its platform was set to be tested in court before the company settled a case brought by a group of publishers for an undisclosed sum earlier this month. In that case, the claimants argued that they were due damages for more than 3,400 copyrights that Shopify users allegedly violated.
To avoid further repercussions and costs, the company has now committed to a number of changes to its platform as part of efforts to clamp down on illegal content.
These include redesigning its templates for web shops to include fields for company information and contact details; providing clear guidance to traders on the applicable EU consumer law; and providing company details about any EU trader when requested by any national consumer authority.
The company also agreed to take down and report any online retailers found to be in breach of EU consumer law.
Related: Shopify Pressures Merchants to Ditch Buy With Prime
Commenting on the announcement, EU Commissioner for Justice, Didier Reynders said: “We welcome Shopify’s commitment to ensure that traders operating on its platform are aware of their responsibilities under E.U. law, and are taken down if they break the rules.”
Role of ‘Gatekeeper’ Platforms
Shopify’s new responsibilities align with the general trajectory of the EU’s position on digital platforms in recent years.
In light of the evolving way people consume digital media, the question of how much responsibility companies like Shopify should shoulder for the content posted on their platforms is being constantly negotiated amid a shifting regulatory landscape.
Several recent legal maneuvers from the EC recognize the role of platform operators as the gatekeepers of digital worlds, and therefore liable for the material they host.
For example, in a policy document outlining the rationale behind the two-act Digital Services Package, the EC writes that “gatekeeper platforms are digital platforms with a systemic role in the internal market.” And the two-part package is designed to regulate such gatekeepers for the twin purposes of protecting internet users and reigning in market abuse.
Read on: Europe Stamps Digital Services Act With Final Approval
The logic of the Digital Services Package is in line with the approach adopted by EU courts and regulators in the past decade. In fact, out of this judicial-regulatory movement has emerged the rising trend for Big Tech platforms to work to prevent hefty fines by offering commitments to change the objected-to practices.
Recent examples of such “gateway platforms” attempting to appease EU regulators include Amazon’s offer to change the way its marketplace operates and Google’s commitment to allow rival ad intermediaries place advertisements on YouTube.
Learn more: Amazon Antitrust Commitments ‘Appear Relevant’ to EU Concerns
Both proposals, which follow a number of antitrust fines levied against the two companies by EU authorities in recent years, seek to alleviate concerns that the firms take advantage of their size and market dominance to suppress competition.
Read on: Google Offers Rivals YouTube Ad Space Amid EU Probe
The trend for making commitments to allay the EU’s objections further suggests that tech firms are increasingly weary of regulatory probes.
Shopify for one appears to have learned a lesson in diplomacy from the string of Big Tech fines that the EC has previously handed out.
The firm also seems to have heard the message of the Digital Services Package loud and clear: Collaboration and compromise are the winning strategies of the day; stubborn resistance will only cost you more.
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