MEPs introduce Know-Your-Business-Customer principle for online platforms

Yesterday [29 September] legislators from the Internal Market and Consumer Protection (IMCO) Committee voted in favour of a report on the Digital Services Act. They introduced a new obligation for platforms: the Know-Your-Business-Customer principle, whereby hosting providers shall verify the identity of their business users. A few other provisions concern the use of Artificial Intelligence (AI).

This initiative report, once approved in the plenary session, will feed into the European Commission’s Digital Services Act package -a revamp of the old e-commerce directive. Such a package is scheduled to be published by the end of the year.

Please find below the compromise amendments there were approved by the IMCO Committee and some key points from the text.

Know your Business Customer

According to the adopted report, hosting providers (platforms) should verify the identity of their business users. Two cases are outlined:

-a business user has a VAT number or an Economic Operator Registration and Identification (EORI) number: platforms should check the identification data provided by their business users against the EU VAT and EORI databases;

-a business user is exempt from VAT or EORI registration: proof of identification should be provided.

In addition, a business user shall declare whether it is acting as an agent for other businesses.

Platforms should ask business users to ensure that all information provided is accurate and up to date. Platforms should not be allowed to provide services to business users when that information is incomplete or when the platform has been informed by the competent authorities that the identity of their business user is false, misleading or invalid.

AI and machine learning

The text introduces a transparency guarantee for consumers. In other words, consumers should know if a service is enabled by AI. They should also be able to opt out and be given more control of the way the content is ranked.

Next steps

The report needs to be approved by a majority of MEPs during the plenary session. The vote is expected to take place during the 19-22 October plenary session

Subsequently, the report will be sent to the Commission to feed into its Digital Services Act package -to be tabled before the end of the year.

If you have any questions on this issue, please do not hesitate to contact Camille Dornier - Policy Manager: camille.dornier@eurosmart.com