Digitalisation has, without a doubt, revolutionised the way goods and services are being offered to, and procured by, consumers in an increasingly online world. Particularly since COVID-19, the need for an online presence and ability to continue providing goods/services via other contactless, online revenue streams, has become even more prevalent, and paramount, for businesses adapting to a new reality and form of ‘business as usual’.

One online business model that has continued to evolve and grow exponentially, whilst disrupting the more traditional means of purchasing goods/services from retailers (either in-store or via the retailer’s website), is the platform-as-a-service (PaaS) and used by online marketplaces, such as early adopters like Ebay and Expedia and more recently by the likes of Uber, Airbnb and Deliveroo.

The growth of online marketplaces can largely be attributable to the means of the platform provider, and businesses using such platforms, to reach consumers both locally and globally. This can potentially be a viable and profitable model for the platform provider who, in exchange for a service fee (often paid by the businesses per transaction made via the platform), drives traffic in the form of users to its website; but does not bear the same risks as the businesses providing the goods/services to customers via the platform.

Online marketplace providers are also generally free to contract with users of their platform on their own terms (“PaaS Terms of Use”), subject to local regulatory requirements, and governing:

  • the use of the online marketplace platform by users (being the platform to business relationship or “P2B” and the platform to customer relationship or “P2C”); and
  • the engagement between users themselves (being the business to customer relationship or “B2C”).

Some jurisdictions have introduced regulations specifically aimed at governing operators of online platforms (including online marketplaces). For example, the EU recently adopted a new P2B Regulation[1] governing how online platform operators deal with EU based businesses, in order to promote fairness, transparency and disclosure in such dealings. For further details on this, see summaries written by our EU colleagues here and here.

Unlike like the EU, Australia does not currently have a single, regulatory regime specifically aimed at P2B dealings. Instead, Australia maintains multiple other rigorous regulatory regimes, that can impact how online marketplace providers operate and engage with business users (and individuals) in Australia (including under their PaaS Terms of Use), which such operators should be aware of (and vigilantly comply with) as applicable.

These include:

1. Australia’s consumer law regimes (“ACL”) governed by the Competition and Consumer Act 2010 (Cth) (“CCA”)

The ACL applies to the supply of goods/services to consumers, which can include the provision of the PaaS to users (e.g. P2B and P2C) falling within the relevant definition of a ‘consumer’ under the CCA. The ACL is rigorously enforced by the Australian Competition and Consumer Commission (the “ACCC“) and includes:

  • Statutory guarantees and warranties. These apply to the provision of goods/services and cannot be excluded, restricted or limited by the terms of a contract with consumers, otherwise such terms will be held void. For example, ensuring goods/services are of acceptable quality, fit for purpose, accurately described, provided with acceptable care and skill, and delivered within a reasonable time. Statutory rights/remedies will also apply for breach of these, meaning it is not always possible to contractually limit liability for such breach in the PaaS Terms of Use.

  • Unfair contracts regime. This requires ensuring terms in a ‘standard form contract’ (as defined in the CCA) do not to cause a significant imbalance between the parties’ rights and obligations, otherwise such terms will be deemed ‘unfair’ and not enforceable. This would include the online marketplace terms of use with both individuals and small businesses considered a ‘consumer contract’ for the purposes of this regime.

  • Misleading or deceptive conduct. This is prohibited under the ACL and may include failure by an online marketplace to clearly and prominently disclose important and relevant information, such as terms and conditions, policies governing behaviour, service levels, processes for de-listing, how the platform moderates reviews, and the full price of its services and reasons for any changes to its pricing.[2]

  • Making false or misleading representations about goods/services. This is prohibited under the ACL and in the context of online marketplace providers, may include examples such as making false or misleading representations about the provision and promotion of its PaaS, such as publishing false reviews, mispresenting the effectiveness of the platform’s review system or processes (including making unsupported statements about the safety and trustworthiness of the platform), misrepresenting users’ rights (including limiting/removing rights under the statutory guarantees above), manipulating or moderating online review processes that misleads users, or misrepresenting how the platform’s ranking algorithms work.[3]

2. Australian Privacy laws governed by the Privacy Act 1988 (Cth)

This applies to the collection, use, disclosure, storage and transfer of personal information (such as that collected of users of an online marketplace) by entities who have an annual turnover of more than AUD$3,000,000, or disclose personal information about another individual to anyone else for a benefit, service or advantage, with an Australian link.

3. Other industry specific regulations

Depending on the type of goods/services available via an online marketplace, industry specific regulations may raise other compliance issues, for example, local liquor laws.

It is also worth noting that as a result the ACCC’s 2019 Digital Platforms Inquiry, reforms to Australia’s competition, consumer and privacy laws are currently being considered. If enacted, these will further enhance Australia’s existing laws to provide even more robust regulatory regimes impacting digital platforms operating in Australia. For further details on the ACCC’s Digital Platforms Inquiry, and proposed reforms, see summaries written by our colleagues here.

Conclusion

Although administered across a number of different Acts (and by different regulators), Australia’s existing regulations collectively aim to help promote fairness, transparency and disclosure between online marketplace’s and the businesses (and individuals) they engage with, which to an extent makes them similar to the specific P2B regulations being adopted elsewhere.

Failure by online marketplace providers to comply with these laws can result in a variety of consequences, such as hefty fines, terms being held void or unenforceable and other enforcement action available to the relevant regulators here.

For more information on laws affecting online marketplaces in Australia, please contact:  

Hamish Fraser
Partner

Tel: +61292269815
hamish.fraser@twobirds.com

Emma Cameron
Senior Associate

Tel: +61292269828
emma.cameron@twobirds.com


[1] Regulation 2019/1150

[2] Australian Competition and Consumer Commission, Platform Operators in the Sharing Economy (Guide, 2016) (‘ACCC Guide on Platform Operators in the Sharing Economy’).

[3] ACCC Guide on Platform Operators in the Sharing Economy (n 2).