European Hotels to Sue Booking for Retail Price Fixing Damages

Report from Reuters

In Brief – Hotel associations from 26 European markets plan to file a class-action lawsuit against Booking .com in the Netherlands over the platform’s long-time use of price parity contract clauses that prohibited hotels using the site from offering a lower price on other online sales channels including competing platforms and hotel’s own websites. The lawsuit follows a September ruling from the EU Court of Justice that questioned the legality of such clauses under EU antitrust law, stating that Booking failed to prove they were necessary or proportionate. The hotels hope to reclaim a significant portion of commissions paid to Booking between 2004 and 2024, potentially plus interest. Filing the lawsuit in the Netherlands, which is Booking’s country of establishment in the EU, allows all European hotels to consolidate their claims in a single jurisdiction through a single litigation. Booking responded to news of the pending suit by saying that the hotel trade groups are mistaken in their view of the ECJ ruling, claiming that the court only addressed a narrow legal question regarding contract clauses used in Germany between 2006 and 2016 and, even then, “did not conclude that Booking's German parity price clauses were anti-competitive or had an effect on competition.” The online booking site added that it has already ended the use of such clauses in Europe to comply with the EU’s Digital Markets Act regardless.

Context – Price parity (or “MFN”) clauses of dominant digital platforms have been a regulatory concern for years, especially when used to limit lower-priced sales on competing digital platforms that charge sellers lower fees. Their use by hotel booking platforms has brought regulatory action in many global markets. Online food delivery platforms have also faced scrutiny. Amazon has an aggressive price parity track record as well. Booking, long the top hotel reservation intermediation platform, and a platform that has had many run-ins with antitrust regulators over their price parity policies, was the first DMA “gatekeeper” company added by the European Commission to the original six – Amazon, Apple, Google, Meta, Microsoft, and ByteDance.

European Commission Opens DSA Investigations of Porn VLOPs

Report from Euractiv

In Brief – The European Commission has announced that it has launched a formal investigation of four major pornographic websites over concerns that they are violating the Digital Services Act (DSA) by failing to provide adequate protection for minors, especially falling short regarding age verification. According to the Commission, all four sites, designated as Very Large Online Platforms under the DSA, currently use simple click-through age checks, which the Commission suspects fail to meet the law’s requirements. Authorities will primarily focus on assessing whether the platforms have conducted proper risk assessments and implemented safeguards to protect children’s mental and physical health. The Commission added that the concern is a priority that extends beyond the largest pornography sites and that it will collaborate with the Digital Services Coordinators in the EU member states to monitor how smaller adult sites, that fall under the DSA’s threshold for Very Large Online Platforms, address the issue. The Commission also reiterated plans to roll out a standardized EU-wide age verification system by the end of next year.

Context – Efforts to regulate online platforms to “protect" teenagers is a growing global phenomenon. Each is a step towards widespread online age verification. Porn is consistently a top target. France is requiring age verification for porn sites. And this DSA action looks to be doing the same. In the US, Texas has done it as well. A challenge to Texas’s law requiring age verification for online porn is under review by the US Supreme Court. But social media is increasingly facing similar demands. France and Texas are both considering age limits. The UK digital platform regulator has announced a “Children’s Code” of rules for “risky” online sites including social media platforms. It calls for “highly effective” age checks to identify users under age 18. Countries across Asia are actively considering online age limits, and Australia has set a firm social media minimum age of 16 for sites besides YouTube. Privacy advocates oppose this trend.

Texas Law Will Put Online Age Verification Duties on App Stores

Report from the New York Times

In Brief – Texas is the second state to require app store operators to verify all users' ages and then block minors from downloading apps without the permission of a parent or legal guardian. SB 2420, the App Store Accountability Act, also requires parental consent before minors can make in-app purchases, mandates app developers create appropriate age ratings for their apps and introduces secure age verification tools. Today, Apple and Google operate the largest US app stores, but the number could grow, especially as antitrust cases target the two giants. Meta has been the most vocal app developer arguing that Apple and Google, who play central roles in the mobile ecosystems, are best positioned to manage age verification by confirming each user’s age at account set-up, telling app developers that a user is old enough for any single app download, and managing parental consent regimes through linked devices and accounts. Apple, Google, and many tech policy advocacy groups have objected to mandates requiring age verification for all online users and it was reported that Apple’s CEO unsuccessfully appealed directly to Texas Governor Greg Abbott encouraging him to veto the bill.

Context – Governments worldwide, including Australia, the EU, UK, and a growing number of US states, are introducing measures that aim to protect teens from various online harms, especially involving social media and pornography. They will all operationally require age verification. Singapore’s digital and media regulator recently announced that very large app stores in that market, which includes Apple, Google and a few China-based companies, will need be take on system-level age verification measures. In March, US Senator Mike Lee (R-UT) and Representative John James (R-MI) introduced a federal version of the App Store Accountability Act in Congress, drawing support from more than 100 national advocacy organizations.  The US Supreme Court heard oral arguments in January regarding the privacy and free speech implications of online age verification requirements, and their upcoming ruling is likely to heavily impact this development in the US.

Indonesian Antitrust Regulator Rules on TikTok Shopping Acquisition

Report from Reuters

In Brief – Indonesia’s antitrust authority has determined that TikTok’s acquisition of leading local ecommerce platform Tokopedia could lead to monopolistic practices and is imposing two years of behavioral remedies to protect competition. TikTok acquired Tokopedia in 2023 to continue ecommerce operations in the country after the Trade Ministry banned social media companies from facilitating ecommerce transactions directly on their platforms. The antitrust investigators said that while the acquisition did not raise concerns with market foreclosure or significant entry barriers for new business players, there are strong network effect that could be used in sales strategies involving tying or bundling practices. Therefore, they are proposing several conditions for the merged parties to ensure competition and choice in payment methods and logistics services, and that TikTok account holders have the freedom to promote products from ecommerce platforms other than Tokopedia. The investigators are asking for quarterly compliance reports over two years.

Context – Indonesia was the first and largest market for TikTok Shop, a live-streaming and video-based ecommerce marketplace integrated into the core TikTok app. It was launched in 2021 and quickly grew into that country’s fifth-largest ecommerce platform, disrupting Indonesian retail both online and from traditional small shops. In response to retail industry pressure, the Indonesian Government imposed a crash regulatory change in October 2023 aimed at TikTok, prohibiting ecommerce transactions from occurring over social media platforms. TikTok, a wholly owned subsidiary of Chinese-based ByteDance, duly committed to complying with local laws and regulations and shut down TikTok Shop Indonesia. However, the Chinese digital giant soon announced that it was acquiring Tokopedia, the second largest ecommerce platform in the country, and planned to jointly develop a new online shopping service in the country. Malaysia’s Communications Minister has said that the country considering some regulation of TikTok Shop as well.