Report from the Wall Street Journal
In Brief – The Italian Competition Authority, which is both an antitrust and consumer protection regulator, has opened an investigation into Booking over concerns that the company’s “preferred partner” and “preferred plus” programs for hotels mislead consumers about the value of certain accommodations. The programs provide greater visibility and endorsement badges to hotels that choose to pay higher commissions to the platforms. Regulators argue that the presentation of these properties in search results, including Booking’s claims about their quality, are due primarily to the hotels’ higher commission levels rather than objective criteria, and could nudge consumers toward more expensive options under the impression they offer better value rather than because the hotels pay the platform for the better treatment. Booking maintains that its programs comply with consumer protection laws and are designed to balance partner interests while preserving customer choice.
Context – When Booking has had run-ins with antitrust regulators, and they’ve had quite a few over the years, the issue has traditionally involved 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. They face a major class action lawsuit from European hotel owners that builds on a 2024 ruling from the EU Court of Justice that questioned the legality of the platform’s price parity clauses, and the company has since been designated a gatekeeper under the EU Digital Markets Act, and their compliance reports say they have ended their use in Europe. But the Italian regulators are taking issue with what appears to basically be an on-platform hotel advertising program that is not labeled as advertising or otherwise “sponsored”. Sellers paying added fees on digital platforms to get better placement is nothing new, for example seller commissions boosted by so-called ad revenues account for a big share of seller fees on a platform like Amazon, but that kind of paid placement or boosting in search results is labeled in some manner as advertising to avoid this kind of trouble.