“Grey” Platforms: When Digital Platforms Cross the Line?

In the rapidly evolving digital economy, platforms like Uber and various ride-hailing services have transformed traditional industries. However, while many of these platforms claim to be mere intermediaries – facilitating transactions between independent service providers and consumers – some exert significant control over the services offered. This raises the question: When does a platform cease to be an intermediary and become a full-fledged service provider subject to stricter regulations?

Understanding this distinction is crucial, as it determines whether a platform enjoys the legal protections afforded to “information society services” under EU law or whether it must comply with the national regulations imposed on traditional service providers (registration, licensing, etc.). Here’s how to identify a “grey” or illegal platform – the one that operates in a regulatory “grey” area by presenting itself as an intermediary while effectively functioning as a direct service provider.

1. Control over pricing

The key indicator that a platform is more than just an intermediary is its control over pricing. True intermediaries merely connect service providers with consumers, allowing the former to set their own prices. However, a “grey” platform:

• Sets fixed fares for suppliers or service providers.
• Prohibit suppliers, service providers to negotiate or modify pricing.
• Prohibit users to see multiple offers of various suppliers.

Uber’s pricing model, for instance, has been a decisive factor in the Court of Justice of the European Union (CJEU) ruling that it functions as a transport service provider rather than a mere intermediary.

2. The platform’s role in service execution

A clear signal that a platform is more than an intermediary is when it plays an active role in executing the service. This includes:

• Assigning or dispatching jobs to service providers instead of allowing customers to freely choose.

Star Taxi App, for example, successfully argued before the CJEU that it merely facilitated licensed taxi connections, whereas Uber’s influence over ride pricing and driver activity led to its classification as a transport provider.

Why it matters?

The classification of a platform as an intermediary or a direct service provider has serious legal and regulatory consequences as for platforms itself and for its partners. Intermediaries enjoy greater legal flexibility under EU law, while service providers must comply with national regulations governing their industry, such as licensing, taxation, and employment laws.

For digital platforms operating in the transportation, accommodation, and service sectors, understanding these legal boundaries is critical. As regulatory scrutiny increases, grey platforms must either adjust their operations to fit the true definition of an intermediary or prepare to comply with the legal obligations imposed on service providers.