After what seems to have been a year of increasing isolationism, it feels refreshing to write a blog about a topic at the other end of the spectrum.
At the end of November, the European Council agreed on draft regulation to ban what it calls “unjustified geo-blocking between member states”. The Council’s move is an attempt to make it easier for consumers and companies to buy and sell products online across the EU, making cross-border parcel delivery more affordable, and increasing consumer confidence through better protection.
Geo-blocking is the practice of stopping customers in a specific country buying or accessing products and services from a website based in another country. The European Commission said that more than 1,400 retailers and digital content providers had engaged with its inquiry, and that the responses showed that geo-blocking of consumer goods and digital content is “common”; 38% of retailers selling consumer goods said that they geo-block consumers located in other EU countries from buying those goods, and 68% of digital content providers geo-block consumers from some EU countries from accessing the content they supply.
Under the proposed rules, websites will not be able to discriminate between customers with regard to the general terms and conditions – including prices – that they offer on the sale of goods and services in instances where:
- They sell goods to be delivered in a country to which the website offers delivery or to be collected at a location agreed on with the customer
- They provide electronically supplied services, such as cloud services, data warehousing services, website hosting and the provision of firewalls
- They provide services that are received by the customer in the country where the trader operates – e.g. hotel accommodation, sports events, car rental and entry tickets to music festivals or leisure parks.
Although this is just proposed legislation – the next step of which will be negotiations between the Council, the Commission and the European Parliament – it is the direction European governing bodies have been moving in, and it’s worth starting to think about how changes of this nature might affect online traders and those businesses supporting their trade.
As it stands, the draft provides a fair degree of leeway as, unlike price discrimination, price differentiation would not be banned. This means traders would be free to offer different general conditions of access, including prices, and to target certain groups of customers in specific territories. However, traders cannot apply different payment conditions for customers because of their nationality, place of residence or place of establishment, so this may restrict a trader’s ability to adjust pricing to take into consideration any regional differences in cost to serve.
How the customer journey might be affected has so many variables it would be wrong to generalize, but there are going to be a host of issues to work through. Would this change how websites direct users based on their IP address? Would this increase or decrease the number of destinations a single trader has or change the benefit of local country domain extensions? The list goes on.
Protecting their brand
One of the most interesting recommendations is that regulators would be able to order the immediate take-down of websites hosting scams, and request information from domain registrars and banks on the trader behind a site. This is a dynamic we have already seen in the UK, with Nominet approving immediate suspension requests from a number of stated UK government bodies if a website is suspected of being involved in illicit activity; that number of bodies may well increase since the Investigatory Powers Bill (or ‘Snoopers’ Charter’ as it is labeled by critics) came into effect earlier this month. We will invariably tread a fine line with a ‘shoot first, ask questions later’ kind of approach to website take-down, but enhanced capability to shut down scam websites has to be a positive thing for brands, customers and online traders alike.
So, although a change such as this will likely add another layer of confusion to the subject of Brexit (but then, what doesn’t?), online traders and brands genuinely need to start thinking about how legislative changes of this nature will affect their business and how they might adapt.