By Julia Fioretti
BRUSSELS (Reuters) - Tech giants including Google (NASDAQ:GOOGL), Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) will for the first time face rules governing their commercial relations with smaller businesses under a law proposed by the European Union on Thursday.
The new rules will specifically target app stores, search engines, e-commerce sites and hotel booking websites such as Expedia (NASDAQ:EXPE), requiring them to be more transparent about how they rank search results and why they delist some services.
The proposal would also give companies the right to collectively sue online platforms if they do not respect the new rules on non-discrimination and transparency.
Music streaming services such as Spotify have been pushing for Brussels to address relations between platforms and businesses, saying the former have an incentive to disadvantage competitors' services.
Apple's entry into the music streaming field with Apple Music sparked concerns from other companies, such as Spotify, which have argued that the 30 percent cut Apple takes of subscriptions in its App Store gives its own service an unfair advantage.
Under the EU's proposal, which will have to be approved by the European Parliament and member states before becoming law, online platforms will have to appoint mediators to deal with complaints and bear at least half the costs.
Platforms will also have to describe in their terms and conditions any differentiated treatment they give to their own services versus those offered by other businesses.
"Platforms and search engines are important channels for European businesses to reach consumers but we must make sure they are not abusing their power, and thus bring harm their business users," said Mariya Gabriel, EU Commissioner for the Digital Economy.
"We are taking a very important step with clear rules on transparency, efficient dispute settlement and the launch of an observatory to analyze online platforms' practices in greater detail."
However, music streaming companies said such transparency requirements did not go far enough.
"In order to be effective, the regulation must also address the discriminatory practices that arise when a platform provider is also the direct competitor with those third parties," said Hans-Holger Albrecht, President of Digital Music Europe which includes Spotify, Deezer and Soundcloud.
CCIA, which represents Google, Amazon and eBay, said online platforms go to great lengths to maintain good relations with their business users because it was in their own interest.
"There is no evidence of a systemic problem that would justify regulation through the strongest legislative instrument available to the EU. A more flexible approach, rather than an outsized, one-size-fits-all Regulation, would be more conducive to the growth of Europe’s digital economy," said Jakob Kucharczyk, Vice President, Competition & EU Regulatory Policy at CCIA.