The eCommerce Directive allows "Information Society Service" (ISS) certain protections, including that they benefit from the 'country of origin principle'. The 'country of origin' principle means that when an action or service is performed in one country and received in another, the applicable law is that of the country where the act or service is performed and not where it is received. If a business does not benefit from this principle, it has to comply with the local law in each EU Member State.
This helps protect the freedom of ISS providers to provide services across the EEA as they will not be subject to national restrictions in each Member State in which they operate (although there are a number of exceptions).
A service will be an ISS if:
- it is normally provided for remuneration
- at a distance
- by electronic means
- at the individual request of a recipient of services.
In 2017, Uber was found by the Court of Justice of the European Union (CJEU) to be providing transport services which were inextricably linked to its intermediation service and to be excluded from the 'country of origin' principle. The ruling was highly significant for Uber as it then became subject to the complex and fragmented regulatory framework around the provision of transport services in each EU Member State in which it operates.
What's the development?
The CJEU has followed the earlier Advocate General's opinion and found that AirBnB provides an ISS and also benefits from the 'country of origin' principle. It disagreed with the French Association for professional tourism and accommodation which was arguing that AirBnB's intermediation service formed an integral part of the accommodation service to which it relates.
The CJEU found that the intermediation service provided by AirBnB Ireland does constitute an ISS. However, making reference to the judgment in Asociación Profesional Elite Taxi (the Uber case), the CJEU said that even where an intermediation service meets the definition of an ISS it will not be classified as such if the intermediation service forms an "integral part" of an overall service coming under another legal classification.
The CJEU found that AirBnB's intermediation service did not form an integral part of an accommodation service, stating that the intermediation service it provides is independent from the accommodation service. It based its finding on the following factors:
- AirBnB, unlike Uber, does not just connect two parties through its platform. While it does provide an immediate accommodation service, it also provides a tool for presenting and finding accommodation for rent by listing places to stay according to guests' criteria. This allows people to conclude rental agreements. This tool is the platform's essential feature and is so important to the provision of accommodation services that the intermediation service is not ancillary to the overall accommodation service. It appears then that the more substantive a platform is, the less likely it is to be ancillary to the overall service to which it relates.
- AirBnB's service is not needed to provide accommodation services; both guests and hosts have a number of other channels at their disposal such as estate agents, classified adverts and property letting websites. The fact that AirBnB's service competes with these channels does not mean that it is needed to provide an accommodation service.
- AirBnB, unlike Uber, does not set or cap the amount of rent(s) charged by hosts using the platform.
The CJEU then said that AirBnB's other services – which include a photography service, an insurance service, a payments service, a price estimation tool and a system for rating users – do not change the overall assessment because they do not modify AirBnB's main intermediation service; they merely allow users to benefit from AirBnB's main service and are not used in isolation.
The CJEU also said that AirBnB does not exercise decisive influence over the provision of accommodation by hosts. AirBnB does not determine the rental price charged. Nor does it select the hosts or accommodation listed on its platform.
In contrast, Uber determines the maximum fare for a trip, it receives the amount from the client before paying the driver, and exercises control over the quality of the vehicles, the drivers and their conduct. The level of control exercised by an ISS provider over the service to which the ISS relates (here, accommodation services and in the Uber case, transport services) is a critical factor when it comes to classifying those services.
In the AirBnB case, France was seeking to apply restrictive rules around being a real estate agent in France under its Hoguet Law to AirBnB Ireland. Under the eCommerce Directive, a Member State may make a rule which restricts the freedom to provide an ISS if certain conditions are met. However, it must notify the European Commission of its intention to make the rule. This enables the Commission to assess whether or not the conditions are met and consequently whether or not the rule can be made. France had failed to make the necessary notification in this case so, unfortunately, the Court did not discuss whether or not the rule could be applied to AirBnB notwithstanding the application of the 'country of origin principle'.
What does this mean for you?
This judgment is of interest to platforms providing services seeking to benefit from the eCommerce Directive country of origin protection.
As these services are still relatively new in legal terms, it's worth understanding the defining features of an ISS and how classifications are made. The criteria on which the CJEU based its assessment provide useful guidance and it seems that the degree of control exercised over the activities of an individual service provider is a critical factor in determining whether or not a service is an ISS.
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