rights are not violated.69 This category includes design fault, manufacturing defects (including
IT security gaps),70 instruction errors and product monitoring defects.71
A design fault arises when the technical concept is incorrect, for example the software in a
smart device is programmed in such a way that it does not prevent the avoidable violation of
absolute rights.72 Manufacturing defects, including IT security gaps,73 arise through faulty
manufacturing. In the case of instruction defects the manufacturer is also liable for damage
which arises on account of the fact that, contrary to its obligation, the manufacturer did not
draw the user’s attention to the risks which may arise during use despite fault-free
manufacturing of the product. IT security gaps, too, are design faults. In order to meet the
product monitoring obligation, a manufacturer must collect all the product-related information
which reveal a product’s risk features. If this information permits conclusions to be drawn
regarding the danger inherent in the product, then the manufacturer is also under the active
obligation to take measures to minimise the risk.74
The applicability of section 823 et seqq. of the German Civil Code is problematical in regard
to autonomous systems if the manufacturer is not at fault. Only in the case of lack of due
diligence would the manufacturer be liable in any way. According to Bräutigam and Klindt, in
such cases parallels might possibly be drawn to strict liability under section 933 of the
German Civil Code (animal owner’s liability).75 It is doubtful, though, whether mechanical
learning leads to comparable unpredictability. The unpredictability of a system’s decisions
would be the decisive condition for the person who set up the system to be held liable. The
crucial issue here is to what extent autonomous systems are able to take unpredictable
decisions based on their underlying algorithms or whether they are always able to choose
the “best” option from among a number of foreseen scenarios and data sets in the context of
a new, previously unforeseen scenario. The key thing is how the underlying algorithm is
constructed. Account must be taken of the fact that the design of a machine-learning system
is based on generalisation beyond those data sets which have been input into the system;
that is they build a model out of the sample inputs.76 That means that the legal interpretation
of “unpredictability” will cause problems, since an algorithm is set up in such a way that it can
react to unforeseen events, but this response is dependent on the data and “decision-making
paths” previously input by the programmer.

     II.   The role of online platforms
Legal relationships in the context of the Internet of Things are complex, and not just on
account of the IT systems which are involved. The various possible constellations of



69
   Hamm Higher Regional Court, judgment of 21 Dec. 2010 (file no. 21 U 14/08); Federal Court of
Justice, judgment of 31 Oct. 2006 (file no. VI ZR 223/05) (Karlsruhe Higher Regional Court).
70
   Spindler, beck-online. GROSSKOMMENTAR, Gsell/Krüger/Lorenz/Mayer (eds), Spickhoff (ed.), as
at 1 April 2016, C.H. Beck Verlag, margin no. 645 re section 823 of the German Civil Code.
71
   Staudinger, Bürgerliches Gesetzbuch Handkommentar, Schulze (ed.), 9th ed., 2017, Nomos Verlag,
margin no. 172 re section 823 of the German Civil Code.
72
   Liability pursuant to section 823 et seqq. of the German Civil Code also covers software, because in
the context of section 823 et seqq. of the German Civil Code the characteristics and thus the dispute is
not relevant to whether software is defined as a thing, see Spindler, “IT-Sicherheit und Produkthaftung
– Sicherheitslücken, Pflichten der Hersteller und der Softwarenutzer”, (2004), Neue Juristische
Wochenschrift, Vol. 44, p. 3145–3208, p. 3145.
73
   Conrad, Handbuch IT- und Datenschutzrecht, Auer-Reisdorff/Conrad (eds), (2nd ed., 2016, C.H.
Beck Verlag), margin no. 382 re section 33, Compliance, IT Security, Correctness of Data Processing.
74
   Nietsch, Verbraucherrecht, Tamm/Tonner (eds), (2nd ed., 2016, Nomos Verlag), margin no. 68 re
section 823 (1) of the German Civil Code.
75
   Bräutigam/Klindt, “Industrie 4.0, das Internet der Dinge und das Recht”, (2016), Neue Juristische
Wochenschrift, Vol. 16, p. 1137–1142, p. 1139.
76
   Domingos, “A Few Useful Things to Know about Machine Learning”, University of Washington,
<https://homes.cs.washington.edu/~pedrod/papers/cacm12.pdf> (last retrieved 28 Nov. 2016).
                                                                                                    23

contracting parties raise further legal questions. Since platforms77 can act as intermediaries
to facilitate the conclusion of a contract between suppliers and demanders and can, in
certain circumstances, even be actively involved in shaping those contracts, uncertainties are
beginning to mount regarding who the contracting party is, what type of contract is being
concluded as well as liability issues.

     1. Vagueness of the terminology applied
Given their numerous different types of business models, questions arise as to how to
classify platforms. There is no standardised definition of what a platform is. Various attempts
have been made, for example based on the consumer’s objective, economic criteria or the
type of offer. It is difficult to precisely classify platforms on account of their complexity, the
numerous different business models applied and the resulting consumer protection issues.
As a lowest common denominator, platforms have been defined as a place where demand
and supply are brought together and the platform operator exercises a controlling function.78
This is not to deny the need to categorise platforms. Functional approaches based on the
materiality of the transaction (goods or services?), the actual transfer of ownership, role
swapping between supplier and consumer, or the durability of activities undertaken on the
platform are definitely useful.79 However, were other types of platforms to be included as
well, the spectrum of functionalities might prove narrow, or too detailed. The traditional binary
nature of legal provisions (a subject matter can either be subsumed under a provision or not)
reaches its limits here. Digital platforms operate in an extremely flexible, innovative business
sector which is undergoing rapid and constant change. As a result the rigid categorisation
and definition of what platforms are becomes less the issue than accumulating approaches
which contribute to a legal understanding of them.

     2. Pattern of problems: information, supplier, liability, transparency and
        competition80
Regardless of the fact that no definition of what platforms are is yet available, what they all
have in common is a number of recurring problems. Some will at least be covered by existing
legal provisions, others only with difficulty.81 The problems can be divided into information
problems (knowing who your contracting partner is) and the complexity of legal relationships,
contractual obligations, liability issues and problems concerning competition law.
Information problem: knowing who the supplier is and that supplier’s status
On account of the nature of websites and contradictory terms and conditions, consumers
sometimes do not know whether they are concluding a contract with a platform operator or
supplier; often it is even unclear whether they are actually concluding a contract. Use of an
Internet platform is as a rule dependent on the platform operator supplying conditions of use.
The creation of a user account can be classed as the conclusion of a contract of use,82 at


77
   In the following the term “platform” is used synonymously with “online platform”. For a definition,
see: Federal Ministry for Economic Affairs and Energy, Grünbuch Digitale Plattformen, 2016.
http://www.bmwi.de/DE/Themen/Digitale-Welt/Netzpolitik/digitale-plattformen.html (last retrieved 30
Nov. 2016), p. 27.
78
   Adam/Micklitz, Information, Beratung und Vermittlung in der digitalen Welt, Rechtsfragen in
Finanzen, Gesundheit und Handel, SVRV Working Paper Nr. 6.
79
   For example for the sharing economy, see Purnhagen/Wahlen, (op. cit., fn. 20), p.14.
80
   This section is based on Adam/Micklitz (op. cit., fn. 78).
81
   The complex of legal relationships would become even more complicated if one were also to
incorporate advertisers as the “fourth player”. Similar provisions would be applicable to advertisers as
apply to providers in their relationship with consumers; in particular account would in addition have to
be taken of competition law provisions. The obligations incumbent upon the platform operator in
regard to advertisers’ compliance with statutory law could also be addressed once more.
82
   See Glossner, Münchner Anwaltshandbuch IT-Recht, Leupold et al. (eds), (3rd ed., 2013, C.H. Beck
Verlag), margin no. 358 in Part 2: The Law of E-Commerce; and for app stores: Loos, “Standard
                                                                                                     24

least when the consumer has to pay to use the site. Consumers are generally not aware of
this consequence.
The lawfulness of such a contract of use can be questioned for various reasons. First of all,
platform operators can make use of a number of liability exemptions, for example under
section 10 of the Telemedia Act (Telemediengesetz, TMG) or based on terms and conditions
with which the operators exclude themselves from the contractual relationship between the
supplier and consumer. The platform operator generally also exempts himself from the
obligation to permanently maintain the online structures without making any changes; an
arbitrary block function to exclude users is not uncommon. Another matter which needs
discussing is the consumer’s intention to conclude the contract if he has not read the various
conditions. It may also not be clear whether a supplier has the status of a consumer or that of
an entrepreneur. This puts the onus not only on the consumer but also on the supplier, since
the latter must be ready to bear the full thrust of sanctions imposed under consumer
protection law if the supplier at some point acquires the status of enterprise.
Liability issues in the triangular relationship between the supplier, platform operator and
consumer
Liability issues in the triangular relationship between the supplier, platform operator and
consumer have also not yet been clarified. Is the platform operator to be co-responsible for
fulfilling the supplier’s obligations, at least as far as consumer protection obligations are
concerned? Or is the platform operator even to be liable as a “second contracting party”
where the consumer cannot hold the supplier liable?83
Even if one assumes that a contract of use has been concluded, then it is still doubtful
whether the terms and conditions would stand up to monitoring. Criticism can, first, be raised
of how the terms and conditions are presented (incorporation): The browse wrap method is
often used, in which the terms are made available via an additional hypertext link. The web
wrap method, by contrast, means that users have to find another link or the terms elsewhere
on the platform’s website. A summary study of British platforms identified the following types
of liability limitation clauses:84 Contractual liability and liability in tort are frequently limited.
Clauses which limit liability for computer failures, viruses and other technical problems are
especially popular. Access clauses which permit platform operators to close down the
platform at will or to deny consumers access at will are, likewise, not uncommon. Sometimes
the terms and conditions will permit unilateral price changes. Arbitration clauses and
exclusive jurisdiction agreements are widespread. In the case of liability these provisions will
be to the consumer’s detriment, since their effectiveness on many platform sites will be cast
in doubt.
Competition: manipulated reviews
Many platforms use internal systems to rate products, services and the reliability of suppliers
in order to increase trust in the service they provide. There have been attempts, on the one
hand, to prevent platforms themselves manipulating these reviews. In 2012 the UK
Advertising Standards Authority, for example, ruled that it was misleading for TripAdvisor to
claim in its advertising that its travel reviews are written by “real travellers” although the
platform operator does not monitor them.85 According to the European Commission, the



Terms for the Use of the Apple App Store and the Google Play Store”, (2016), Journal of European
Consumer and Market Law, p. 10–15, p. 11.
83
   See Domurath, Sachmängelhaftung in der Plattformökonomie, SVRV Working Paper No. 3 as
regards this issue.
84
   Riefa, Consumer Protection and Online Auction Platforms – Towards a Safer Legal Framework
(Markets and the Law 2015), p. 125 et seqq.
85
   ASA Complaint Ref. A11-166867, 1 Feb. 2012,
<https://www.asa.org.uk/Rulings/Adjudications/2012/2/TripAdvisor-
LLC/SHP_ADJ_166867.aspx#.V586zK7Ix69> (last retrieved 20 Oct. 2016).
                                                                                                   25

technique of “dimming” also breaches the Unfair Commercial Practices Directive.86 A rating
system may not paint an excessively positive picture of the supplier.87
On the other hand, there is now a proper market for manipulated online reviews. In an
initiative launched in 2013 called Operation Clean Turf, New York Attorney General Eric
Schneiderman identified a total of 19 enterprises specialising in fake reviews.88 Amazon has
already sued 1,000 users for posting fake reviews as well as several enterprises whose
business models are based on fake reviews.89
One particular problem from the consumer’s perspective is that it is hard to identify
manipulated reviews. One possible remedy is Cornell University’s Reviewskeptic,90 an
algorithm which unmasks fake hotel reviews, by its own account with a probability of 90%.
No 22 of Annex I to the EU Unfair Commercial Practices Directive prohibits “falsely
representing oneself as a customer” – which could represent the connecting factor for a ban
on fake reviews.91
Competition: lack of transparency in search results lists
The lack of transparency in search results lists is also criticised by many. A search engine
can act as a passive “conduit” (i.e. which only creates links between Internet users), as an
“editor” (i.e. which, like a newspaper editor, decides what to show and what not to show) or
as an “adviser” (i.e. whom users can trust in regard to the suggestions made).92 Search
engine optimisation exacerbates this problem.93
The blending of advertising and information and opaque results lists can mislead
consumers.94 Berlin Regional Court issued a decision much in this vein, ruling that popularity
rankings on a hotel booking portal influenced by commission payments constitute
impermissible misleading advertising.95 The same must also apply to search engine results
provided by other online portals. The blending of advertising and information impairs
consumers’ judgment. Even if competition law were able to remedy this issue, doubts would
have to be raised as to how effectively rights can be enforced, since this is left to consumer
protection agencies and to competitors, who are competent under the Act against Unfair
Competition (Gesetz gegen den unlauteren Wettbewerb, UWG). This may no longer be
sufficient given the platforms’ increasing market power.



86
   Guidance on the Implementation/Application of Directive 2005/29/EC on Unfair Commercial
Practices, as at 25 May 2016, SWD(2016) 163 final, COM(2016) 320, p.136,
<http://ec.europa.eu/justice/consumer-marketing/files/ucp_guidance_en.pdf> (last retrieved 20 Oct.
2016).
87
   Düsseldorf Higher Regional Court, judgment of 19 Feb. 2013 (case nos I-20 U 55/12, 20 U 55/12).
88
   They were made to pay fines of between US$ 2,500 and 100,000;
<http://www.businessinsider.com/new-york-cracks-down-on-fake-yelp-reviews-2013-9?IR=T> (last
retrieved 20 Oct. 2016).
89
   <https://www.theguardian.com/technology/2015/oct/18/amazon-sues-1000-fake-reviewers> (last
retrieved 20 Oct. 2016).
90
   <http://reviewskeptic.com/> (last retrieved 20 Oct. 2016).
91
   Guidance on the Implementation/Application of Directive 2005/29/EC on Unfair Commercial
Practices, as at 25 May 2016, SWD(2016) 163 final, COM(2016) 320, p.140,
<http://ec.europa.eu/justice/consumer-marketing/files/ucp_guidance_en.pdf> (last retrieved 20 Oct.
2016).
92
   See Grimmelmann, “Speech Engines”, (2014), 93 Minnesota Law Review, p. 868–952 for a more
detailed analysis.
93
   See, e.g., Schirmbacher/Engelbrecht, “Suchmaschinenoptimierung und (un)zulässige SEO-
Maßnahmen”, (2015), Computer und Recht, Vol. 10, p. 659–664.
94
   The same conclusion is drawn by Scardamaglia/Daly, “Google, online search and consumer
confusion in Australia, (2016), 24 International Journal of Law and Information Technology, p. 203–
228.
95
   Berlin Regional Court, order of 25 Aug. 2011 (file no. 16 O 418/11).
                                                                                                  26

3. The example of health apps96
Like other apps, health apps use a three-pole system of actors in which the app creator, the
app store and the consumer enter into legal relationships with each other. This creates
various legal problems, especially as regards the contracting party, the effectiveness of
terms and conditions, and liability issues. These will be discussed in the following by way of
example.97
Uncertainty regarding the contracting party
What contractual relationships arise between the individual actors following the purchase of a
health app? Generally speaking, official iOS and Windows app stores only sell apps for their
own operating systems via their own official sales channels. On account of their market
power, many suppliers create their apps for iOS and Windows; in consequence they are
forced to accept the official app stores’ sales terms. The following analysis focuses on the
Apple App Store. The situation is similarly complex for other sales channels, such as Google
Play, Microsoft Windows Phone Marketplace, BlackBerry App World and the Amazon App
Store for Android.98
The conditions applicable in the relationship between Apple and the supplier of the app are
set out in detail in the iOS Developer Program License Agreement (“iOS Agreement”). Under
that Agreement, the law of Luxembourg applies.99 In its relationship with the supplier of a
chargeable app, Apple has the status of a “commissaire” under the law of Luxembourg,
which is comparable to that of a German “commission agent” pursuant to section 383 et
seqq. of the German Commercial Code (Handelsgesetzbuch, HGB) who acts in his own
name for another’s account.100 In the case of free apps, Apple is the supplier’s “legal agent”.
When it comes to sales to end consumers in Germany, Apple is therefore a “commissaire”
under the law of Luxembourg.101 From the supplier’s perspective, the App Store is the
consumer’s contracting partner (distributer).
However, the contract between the App Store and the supplier (the iOS Agreement) conflicts
with that between the App Store and the consumer (the iTunes terms). Consumers will
probably feel that they are concluding a contract with the supplier. However, no reference is
made anywhere to the fact that a contract is to be concluded with the supplier, which is why
consumers can ultimately assume that they have only concluded a contract with the App
Store.102 In the end it is not clear who the contracting party is, which will, in turn, have
consequences in the event of a liability case.
Unequivocal legal situation on account of the Apple App Store’s terms and conditions
The legal uncertainties increase when one analyses the Apple App Store’s Terms of Use.103
They refer to German law,104 which is why section 305 et seqq. of the German Civil Code is
applicable.


96
   This section is based on Adam/Micklitz (op. cit., fn. 78).
97
   The following section is essentially based on Solmecke/Taeger/Feldmann (eds) Mobile Apps,
Rechtsfragen und rechtliche Rahmenbedingungen, Solmecke/Taeger/Feldmann (eds), (De Gruyter
Verlag, 2013), Chapter 3.
98
   See, as regards the other providers, Engelhardt in, Mobile Apps, Rechtsfragen und rechtliche
Rahmenbedingungen, Solmecke/Taeger/Feldmann (eds), (De Gruyter Verlag, 2013), margin no. 177
et seqq. and 302 et seqq. re Chapter 3.
99
  <https://developer.apple.com/programs/terms/ios/standard/ios_program_standard_agreement_2014
0909.pdf>, see p. 47 (last retrieved 28 Nov. 2016).
100
    Engelhardt in (op. cit., fn. 98), margin no. 180 re Chapter 3.
101
    No. 7.1 of the iOS Agreement read in conjunction with Schedule 1, section 1 and Exhibit A re
Schedule 1.
102
    See also Lachenmann in Mobile Apps, Rechtsfragen und rechtliche Rahmenbedingungen,
Solmecke/Taeger/Feldmann (eds), (De Gruyter Verlag, 2013), margin no. 342 re Chapter 3.
103
    Lachenmann, (op. cit., fn. 102), margin no. 323 et seqq. re Chapter 3.
                                                                                             27

However, it is not, for instance, clear whether the terms regarding the downloading of
individual apps are actually incorporated pursuant to section 305 of the German Civil Code or
whether they represent a framework agreement within the meaning of section 305 (3) of that
Code. Both options are inconclusive. On the one hand, the terms cannot apply to the
purchase of individual apps because they are only shown to consumers once when they
create an iTunes account for the Apple App Store. When purchasing individual apps they are
neither shown again nor is reference made to them. If one assumes that each time an
individual app is downloaded a new contract is concluded with the App Store, then the Terms
of Use are not effectively incorporated for any of these individual contracts for the Apple App
Store.105 On the other hand, classifying the terms as a framework agreement which then
applies to the purchase of each app is also inconclusive:106 If that were the case, then Apple
would have to make explicit reference to the Terms of Use and to the fact that these will
apply each time an app is downloaded when a consumer opens an iTunes account. Taking
the consumer’s perspective, it can be assumed that merely creating “access” does not mean
concluding a framework agreement for all subsequent app downloads. However, it is not only
unclear that the Terms of Use are being incorporated and to which contract they are
applicable (creating an iTunes account or downloading an app), the effectiveness of the
terms themselves is also unclear (even if one assumes that they had been effectively
incorporated). Two problems are striking here: the confusing nature of the Terms of Use and
the limitations on liability.
What is clear is that the App Store’s terms not only refer to the mobile App Store, but also to
the iTunes Stores, the Mac App Store, the App Store for Apple TV, the iBook Store and the
Apple Music Service. A document which, depending on its format, can run to around 20
pages contains terms and conditions for six different Apple services; paragraphs are not
numbered. Various topics are intermingled and the document is extremely confusing.

    4. Current state of the debate on a reform of platforms
The focus in the following will be on two reform proposals: First, France has submitted
various bills to the European Commission in the notification procedure under Directive
2015/1535/EU107 and the now amended Directive 98/34/EC.108 Second, the Research Group
on the Law of Digital Services (RG Digital Services) has published a Discussion Draft of a
Directive on Online Intermediary Platforms.109
Information asymmetries
Articles 19 and 20 of the French Digital Republic Bill concern general information
requirements incumbent on online portals. Accordingly, a platform110
      “shall be obliged to provide trustworthy, clear and transparent information on the
      general terms and conditions of use for the intermediation service they provide

likewise Loos, “Standard Terms for the Use of the Apple App Store and the Google Play Store”,
(2015), Journal of European Consumer and Market Law, p. 10–15.
104
    <http://www.apple.com/legal/internet-services/itunes/de/terms.html> (last retrieved 20 Oct. 2016),
Section J “Anwendbares Recht”.
105
    This is the conclusion drawn by Lachenmann in (op. cit., fn. 102), margin no. 318 re Chapter 3.
106
    Likewise in Lachenmann, (op. cit., fn. 102), margin no. 319. re Chapter 3.
107
    Directive (EU) 2015/1535 of the European Parliament and of the Council of 9 September 2015
laying down a procedure for the provision of information in the field of technical regulations and of
rules on Information Society services (codification) (OJ L 241, 17.9.2015, p.1).
108
    Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a
procedure for the provision of information in the field of technical standards and regulations (OJ L 204,
21.7.1998, p. 37).
109
    Research Group on the Law of Digital Services, “Discussion Draft of a Directive on Online
Intermediary Platforms”, (2016), Journal of European Consumer and Market Law, p. 164–169.
110
    Notification Number 2015/626/F <http://ec.europa.eu/growth/tools-
databases/tris/en/search/?trisaction=search.detail&year=2015&num=626> (last retrieved 20 Oct.
2016).
                                                                                                      28

and on the arrangements for referencing, classifying and dereferencing content,
      goods or services to which this service provides access. They must clearly show
      whether there is a contractual relationship or capital links with those referenced,
      whether there is any compensation by those referenced and, where applicable,
      the impact of this on how content, goods or services offered are classified.”
Article 21 of the Digital Republic Bill specifically concerns rating portals.111 Under the
provision, which is to be incorporated into the French Consumer Code,
      “any person involved in the activity of collecting, moderating or distributing consumer
      opinions online, as the main party or an accessory, is obliged to issue truthful, clear
      and transparent information on the methods used to check the opinions posted online.
      They shall specify whether or not the opinions that they have posted online have been
      checked and, if they have, indicate the main characteristics of the checks performed.”
The Bill is to be given concrete form in a decree on information requirements specifically for
comparison websites.112 Under this draft, all comparison websites must specify in a directly
and easily accessible dedicated section how the comparison service works. It must include
the following information: (1) the different ranking criteria of offers of goods and services and
their definition; (2) the existence or non-existence of a contractual relationship or capital links
between the comparison site and the professionals listed; (3) the existence or non-existence
of any payment to the site by the professionals listed and, where appropriate, the impact
thereof on the ranking of offers; (4) details of the cost components and the possibility that
additional charges will be added; (5) if applicable, the differences between the commercial
guarantees of the products compared; (6) completeness or non-completeness of the offers
for goods or services compared and the number of listed sites or businesses; (7) the
updating time frame and method of offers compared. Information is also to be displayed on
each comparison results page, namely the ranking criteria and, in particular, whether or not a
fee is charged for the listing (“linking”).
According to the expert evaluators, the European Commission contradicted the bills, but
without publishing its opposing opinion. The Commission essentially criticised the fact that
the Unfair Commercial Practices Directive and the E-Commerce Directive stood in the way of
existing and fully harmonised legal frameworks. Irrespective of the issue of full
harmonisation, which can be made out here, it is doubtful what purpose further information
requirements could actually serve. The meaningfulness of information requirements has not
been proven,113 and it is doubtful whether the French Bill will have a sustainable impact on
platform economics. It does, however, appear to make sense as regards identifying the
contracting party.
A draft of a Platform Directive is also currently being discussed in the literature. The RG
Digital Services is leading the way and has put forward a Draft Directive.114 The Research
Group proposes including certain disclosure requirements, in the same way as the French
Bill does. The authors propose introducing information requirements in respect of details of
the contractual relationships between the consumer, supplier and platform operator. The
proposal leaves it open how that information is to be provided. One possible solution, in the

111
    Notification Number 2015/630/F, <http://ec.europa.eu/growth/tools-
databases/tris/en/search/?trisaction=search.detail&year=2015&num=630> (last retrieved 20 Oct.
2016).
112
    Notification Number 2015/498/F, <http://ec.europa.eu/growth/tools-
databases/tris/en/search/?trisaction=search.detail&year=2015&num=498> (last retrieved 20 Oct.
2016).
113
    Ben-Shahar/Schneider, More than you wanted to know, (Princeton University Press 2014).
114
    Busch/Schulte-Nölke/Wiewiórowska-Domagalska/Zoll, “The Rise of the Platform Economy: A New
Challenge for EU Consumer Law?”, (2016), Journal of European Consumer and Market Law, p. 3–10;
Busch/Dannemann/Schulte-Nölke/Wieworowska-Domagalska/Zoll, “On the Law of Digital Services:
Discussion Draft of a Directive on Online Intermediary Platforms”, (2016), Journal of European
Consumer and Market Law, p.164–169.
                                                                                                29

case of a platform with user accounts, would be that attention would have to be drawn to the
information in a separate step when an account was being created, for example by means of
pictogrammes or governmental rating systems.
Definition of “platform”
The French Bill proposes the following definition:
      “Under the terms of this Article, online platforms are deemed to be activities
      consisting of classifying or referencing content, goods or services offered or
      uploaded by third parties, or of electronically connecting several parties with a
      view to selling goods or providing services (including free of charge), or
      exchanging or sharing goods or services. Persons exercising this activity in a
      professional capacity are qualified as online platforms.”115
Article 2 of the RG Digital Services’ proposal contains the following definition, however:
      “‛online intermediary platform’ means an information society service accessible
      through the Internet or by similar digital means which enables customers to
      conclude contracts with suppliers of goods, services or digital content. This does
      not include services which only identify relevant suppliers and which direct
      customers to those suppliers’ websites or contact details.”116
The Research Group’s suggestion thus has rather limited scope: the connecting factor is the
platform as the place of conclusion of the contract. This means that ratings platforms would
not fall under the scope of application of the legislation because the contract between the
consumer and supplier is generally concluded in the real world. In the end, what is required
is a very nuanced regulation applicable to a small number of platforms. In the light of Article 8
of the proposed directive that is regrettable, because this provision on rating systems could
easily be applied to ratings platforms.
Liability issues
The problem of the liability of intermediaries is not new to the legal system. A medieval
market place could be described as an intermediary which brought together supply and
demand. Special rules apply for brokers and for intermediaries under travel law and in the
case of financial services. Nevertheless, it appears appropriate to seek a separate solution
for Internet portals. Unlike in their relationships with brokers, travel agents or credit
intermediaries, consumers often do not pay a portal anything and do not even conclude a
contract of use. Dealings on Internet platforms cannot be compared with a broad brush to
agency business either since the context of platform economics is missing. Securities and
insurance markets pose a much greater risk to consumers than the overwhelming majority of
Internet platforms do.
The RG Digital Services’ proposal for a directive addresses various liability options and
duties to protect.117 When it comes to the platform operator’s own duties to protect
consumers, Article 7 of the proposal suggests that the platform operator be obliged to
immediately pass on all communication between the consumer and the supplier if it provides

115
    Article 19 of the French Digital Republic Bill, Notification Number 2015/626/F in the European
Commission’s Notification Procedure <http://ec.europa.eu/growth/tools-
databases/tris/en/search/?trisaction=search.detail&year=2015&num=626> (last retrieved 20 Oct.
2016).
116
    Busch/Dannemann/Schulte-Nölke/Wieworowska-Domagalska/Zoll, “On the Law of Digital Services:
Discussion Draft of a Directive on Online Intermediary Platforms”, (2016), Journal of European
Consumer and Market Law, p. 164–169.
117
    Busch/Schulte-Nölke/Wiewiórowska-Domagalska/Zoll, “The Rise of the Platform Economy: A New
Challenge for EU Consumer Law?”, (2016), Journal of European Consumer and Market Law, p. 3–10;
Busch/Dannemann/Schulte-Nölke/Wieworowska-Domagalska/Zoll, “On the Law of Digital Services:
Discussion Draft of a Directive on Online Intermediary Platforms”, (2016), Journal of European
Consumer and Market Law, p. 164–169.
                                                                                               30

a general system of communication on the platform. Under Article 7(2) of the proposal, when
consumers have access to the platform operator they also have access to the supplier. That
seems to make sense, since it ought not to be possible for the platform operator to thwart the
supplier’s information requirements. The platform operator’s position of power is thus also
appropriately limited. To protect platform users (both consumers and suppliers), Article 9 of
the proposal requires that platform operators must intervene where the operator learns of
any criminal behaviour or behaviour which interferes with users’ physical integrity, privacy,
property or liberty. That represents a generous extension of obligations compared to the E-
Commerce Directive, which only concerns liability for information which is transmitted. The
liability gap would thus have been closed.
Further, the proposal provides for a specific liability system for platform operators. The basic
standard is set out in Article 16(1) of the proposal: Whoever only presents himself as an
intermediary is not liable. Exceptions are listed in Articles 17 to 20. Under Article 18, the
platform operator is jointly liable if the operator exercises special influence on the supplier.
Article 19 lays down liability in the event of the platform operator making damaging,
misleading statements about consumers, suppliers, the goods or services offered, and digital
content. Article 20 brilliantly rounds off the liability system and demands liability for
guarantees which the platform operator gives regarding the supplier/consumer or
goods/services offered.
Outlook
Of what value are the liability rules contained in the Research Group’s proposal? On the one
hand, the proposed directive presents quite a balanced liability regime: It introduces no
general responsibility on the part of the platform operator, but distinguishes between different
cases. Article 14 could be sufficient as regards identifying suppliers on platforms.118
Comparisons with travel law are obvious:119 Article 13(1)(2) of the Package Travel
Directive120 provides for the possibility of the travel agent being liable for providing the
contractually agreed package travel services. The proposals are reminiscent of the concept
of linked contracts under section 358 et seqq. of the German Civil Code. In fact the contract
concluded between a supplier and consumer is based on the platform operator providing the
required virtual environment, whereby the platform operator becomes the indispensible
intermediary.121
Instead of expanding the platform operators’ own duties to protect as well as liability, one
option would be to impose monitoring and control obligations. That way platform operators
would not be elevated to the position of partner in liability but more to the rank of “contact
person”. To do that the system of exemptions applied in the E-Commerce Directive would
have to be amended. One possibility – which the European Commission also addresses in
its Guidance on the Implementation/Application of Directive 2005/29/EC on Unfair
Commercial Practices122 – would be to introduce an obligation to shape the platform’s
structures in such a way as to enable, or even force, them to conform to consumer protection

118
    See, in this context, Schröder/Bühlmann, “Übernahme der Anbieterkennzeichnung durch den
Portalbetreiber – ein Modell für Deutschland?”, (2012), Computer und Recht, Vol. 5, p. 318–324.
119
    Busch/Schulte-Nölke/Wiewiórowska-Domagalska/Zoll, “The Rise of the Platform Economy: A New
Challenge for EU Consumer Law?”, (2016), Journal of European Consumer and Market Law, p. 3–10,
p. 8.
120
    Directive (EU) 2015/2302 of the European Parliament and of the Council of 25 November 2015 on
package travel and linked travel arrangements.
121
    Please refer to Loos, “Standard Terms for the Use of the Apple App Store and the Google Play
Store”, (2016), Journal of European Consumer and Market Law, p. 10–15, p. 11, as regards this link
between contracts and the application of the Unfair Commercial Practices Directive and the Consumer
Law Directive.
122
    Guidance on the Implementation/Application of Directive 2005/29/EC on Unfair Commercial
Practices, as at 25 May 2016, SWD(2016) 163 final, COM(2016) 320, p.126 et seq.,
<http://ec.europa.eu/justice/consumer-marketing/files/ucp_guidance_en.pdf> (last retrieved 20 Oct.
2016).
                                                                                                31

law – Article 14 of the Research Group’s proposal for a directive is thus to be endorsed. If a
supplier is forced during the registration process to provide information under consumer
protection law, then the platform can easily monitor compliance. If a platform is unlawful in
terms of its structure, consumer organisations, which are responsible for enforcing rights,
would have a direct point of contact. The platform operator would have fewer risks to contend
with than in the case of the above-mentioned proposal for a real platform directive.

 III.    Consumer data protection
It is impossible to discuss the Internet of Things and the law of digital services without going
into data protection law.123 A Privacy Sweep by the Global Privacy Enforcement Network124 in
which 25 different data protection authorities investigated how enterprises communicate their
privacy policies to consumers found “alarming” shortfalls for more than 300 Internet of Things
devices. In particular, they did not provide consumers with sufficient information about how
their personal information was collected and processed nor about their rights in this respect.
Data protection plays a key role on various levels in the context of the provision of digital
services. Substantive law problems arise which are in part structurally similar to the contract
law problems which arise in the context of digital services (e.g. the packaging of offers with
data or the monitoring of terms in privacy notices). Problems specific to data protection law
are primarily the erosion of the need for consent and guaranteed data protection in
international data traffic. A discussion of the inconclusive level of protection in regard to
transnational transactions leads into an explanation of the consequences of
deterritorialisation in regard to digital consumer law (see IV. below.).

      1. Prohibition of coupling
If consent to the processing of one’s personal data is formulated as a binding condition for
contract performance although the data processor does not actually need the data for that
purpose, then the voluntariness of that consent pursuant to Article 7(4) and Recital 43 of the
General Data Protection Regulation is called into question. Article 7(4) of the Regulation
goes beyond section 28 (3b) of the Federal Data Protection Act (Bundesdatenschutzgesetz,
BDSG),125 which only concerns the coupling of consent to address trading and advertising
with the conclusion of a contract.
This means it is disputable whether the prohibition of coupling in fact prohibits “paying” with
one’s data.126 It must be considered whether the protection of the general right of personality
pursued in the Federal Data Protection Act by means of a prohibition subject to approval
possibly permits data protection law and fair trading law to be treated differently (the latter
being concerned with the misleading of market participants).127

      2. Monitoring of terms and conditions in privacy notices
Privacy notices are subject to monitoring because they are generally presented to and
accepted by consumers in a formulaic manner and consumers are often in a structurally
weaker negotiating position. Where one party is in a weaker position, under data protection
law the voluntariness of consent within the meaning of section 4 of the Federal Data

123
    This section is based on Schmechel, (op. cit., fn. 16) and Domurath/Kosyra,
Verbraucherdatenschutz im Internet der Dinge, SVRV Working Paper Series No. 3.
124
    Information available on the website of the Irish Data Protection Commissioner:
<https://www.dataprotection.ie/docs/23-9-2016-International-Privacy-Sweep-2016/i/1597.htm> (last
retrieved 24 Nov. 2016).
125
    Kühling/Martini, “Die Datenschutz-Grundverordnung: Revolution oder Evolution im europäischen
und deutschen Datenschutzrecht?”, (2016), Europäische Zeitschrift für Wirtschaftsrecht, Vol. 12,
p. 448–454, p. 451.
126
    For a critical analysis of the prohibition of coupling, see Schantz, “Die Datenschutz-
Grundverordnung – Beginn einer neuen Zeitrechnung im Datenschutzrecht”, (2016), Neue Juristische
Wochenschrift, Vol. 26, p. 1841–1847, p. 1845.
127
    See Domurath/Kosyra, (op. cit., fn. 123).
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