On 25 November 2024 the Commission hosted its seventh DMA compliance workshop which was a first for two reasons: 1. The first European gatekeeper had to explain and answer to market participants interested and in parts skeptical about the travel platform’s DMA compliance plans. 2. It was a little (too) calm. Does this have to do with the European lack of temper of the gatekeeper on the stand, or are we starting to lose the excitement of the regulatory revolution and settling into a regulatory routine?
By Sarah Hinck & Jasper van den Boom
Those who might have thought the compliance workshop would be all about price parity clauses and would be surprised about the range of provisions discussed and concerns voiced during the session. Besides price parity, anti-steering under Art. 5(4) DMA and the data obligations were considered worth its own sessions. And the workshop went even beyond. Workshop participants also raised fundamental questions about the interpretation of Art. 5(7) and Art. 6(5) DMA, not deemed relevant by Booking.
Booking.com – the Gatekeeper
Booking is the smallest and only European gatekeeper (at least, originally), yet it did not escape designation under the DMA. In fact, it barely tried to escape designation and was the only gatekeeper not to lodge a defence on the basis of Art. 3(5) DMA. Perhaps there is truth to the idea that European companies are simply less averse to being regulated than US companies, even if they are now established in Delaware officially.
While Booking is smaller than the other digital ecosystems, it is not as small as many tend to think. Booking Holding Corporation operates brands such as Priceline, Agoda, Kayak, Open Table, rentalcars.com, Rocketmiles, Fareharbor, Hotelscombined, Cheapflights, and Momondo. It would have also owned eTraveli, but that did not fly according to the Commission.
In May 2024, Booking with its online intermediation service Booking.com as core platform service (CPS) was designated as a gatekeeper under the DMA. For those who are interested in our speculations back then about the impact of the DMA on Booking’s parity clauses, self-preferencing and the data access obligations, there is a SCiDA blog . We don’t think that Booking has read it as it did not try any of the amazing tricks to circumvent compliance that we fantasized about, but they simply… complied?
Booking issued its compliance report on the 13th of November. It received some criticism during the workshop that it did not follow the Commission’s template. On the other hand, who actually did? Booking’s 30-page compliance report details the obligations that it has actually made changes for: Art. 5(2), 5(3), 5(4), 6(9) and 6(10) DMA. For the rest, Booking believes that it already was compliant or that it simply does not apply to them. Booking has explained that it did not follow the template because it wanted to be clear and easily understandable on what had changed and how. Looking at how the workshop unfolded, this may not have been unwarranted.
Booking’s compliance measures – a presentation
With a lot of time for only a couple of provisions, Booking walked the audience through its main compliance measures, focusing on price parity, anti-steering and some of the data obligations under the DMA with the help of its detailed presentations from overview slides to actual demos of the implemented measures. Booking’s confidence in their implementation showed in their presentations, which were generally very short and to the point. So, what were the points of contention?
Art. 5(3) – Price Parity Clauses
First came the discussion we have all been waiting for: parity clauses. Booking’s long history of parity clauses and their legal woes started in Germany in 2006 when the Bundeskartellamt prohibited wide parity clauses. Booking replaced the wide parity clauses with narrow parity clauses by 2015, which were again prohibited by the Bundeskartellamt and the German Federal Court of Justice in 2021. The European Court of Justice has even looked into whether these parity clauses can be considered ancillary restraints on the request of the Amsterdam court, where Booking had sneaked in a preliminary reference procedure. Again, the Court did not favor Booking. Thus, after a mere 18 years, it was finally clear that Booking is not supposed to impose parity clauses and that this falls in the purview of competition law.
This would have been a landmark case, but by now Booking is already regulated under the DMA, so its days of imposing parity clauses would be behind them anyway. In fact, the DMA goes even further than prohibiting parity “clauses”, and instead prohibits parity. Before, Booking had only removed its parity clauses in 6 Member States. To comply with the DMA, Booking has updated 5 standard terms, given 70 waivers in negotiated contracts, and has sent “millions” of communications to its business partners in their preferred language to update them on the end of parity.
Booking, under the Commission’s guidance, found that to comply with the DMA they must not only remove parity clauses but everything that may produce an equivalent effect to parity. This could include de-ranking or any barriers to inventory related to parity requirements, or the need to participate in paid and preferred programs. While Booking found that it was already not guilty of such measures of equivalent effect, it has introduced controls in the form of approval process cycles, trainings and reviews to ensure that they do not start now. Booking brought their compliance measures as if widely supported and endorsed, and more than we could have asked for.
The first comment by HOTREC, casted some doubt on this broad consensus. Namely, Booking has stated in their compliance report that the majority of partners supported or endorsed their approach. Yet the commentators found this misleading: they have listened to Booking’s implementation but have never said they endorse it. The wording of the report is at best misleading, and at worst intentional. Booking however defended their wording in the report as it was (technically) correct. The finer details on how correct are submitted to the Commission in the confidential versions of the compliance report.
Then, the discussion actually moved on to parity. This debate was somewhat chaotic for a number of reasons: 1) not everyone had time to fully read and digest the report; 2) not everything is in the non-confidential summary, leading to a debate on uneven grounds; and 3) not everyone agrees on the meaning of the text of the DMA. A representative from Hotel Forum asked to have further explanations on the finding that there were no equivalents to parity, mentioning ranking algorithms, conversion scores, and partner programs. A representative from Hotel Online asked about whether Booking takes price into consideration for its rankings, and Visita and the German Hotel Association wanted to know more about the Performance Scores.
The big problem with most of these concerns, valid or not, is that they were not exactly related to parity. Even if they are, there is not really any way of pushing that point forward without having access to the mechanisms of Booking’s algorithms. Booking defended itself by stating that using the partner program is optional, and that many suppliers achieve success on Booking without using preferred programs, the ranking algorithms are complex and take into account a number of factors and preferences, but not external prices. Taking price into account for competitiveness on the website, however, is seen as a normal business practice and is indeed not related to parity. Other questions, such as the mandatory use of Booking’s payment system as part of the preferred program did not relate to parity at all. Booking still answered these questions, explaining that they can only offer special deals where they carry part of the cost to offer a discount if Booking’s payment system is used.
One debate that does raise questions is the use of multi-sourcing, put forward by a representative from the German Hotel Association. If Booking identifies low prices on the web and takes this into account for its offers, it can use these to undercut the prices of others. As a result, it would never pay for hoteliers to offer lower prices on their websites or other OTAs because it would simply lead to a race to the bottom (pricewise). Booking denied that it undercuts competitors and pointed out (perhaps rightly) that such a form of price competition would ultimately benefit consumers. In the final minutes towards the break, the workshop devolved into a back and forth between Booking and the stakeholders and the questions became less whether Booking was actually compliant, and more about discontent between the parties. Good thing that we had a 5-minute break before doing the same thing in relation to anti-steering.
Art. 5(4) DMA – Anti-Steering
Booking’s presentation on anti-steering was even shorter. Booking explained three points: 1) it does not prevent its business users from contacting end-users after the latter have been “acquired”; 2) an end-user is considered acquired after Booking has been remunerated for its intermediation service; 3) to simplify this process for its business users, Booking considers remuneration to have taken place upon the moment of check-in at the hotel, as cancellation options have then expired.
Booking argues that this implementation is rather gracious from its side. According to Rec. 40 DMA, Booking only has an obligation once a user is acquired. Acquisition normally happens when the money of the intermediation reaches Booking’s books (accounting books, they are not trying to compete with 90s Amazon). This processing can take place weeks or months after the actual stay, and it would be confusing for business users if they were unsure if they could already contact end-users. Thus, check-in seemed like a pragmatic and natural moment. The check-in allows the business user to have contact with the end-user and ask for the email address and contact details of the end user themselves. Meanwhile, the business user does not have to wait for the green light from Booking.
Booking found that this is what the DMA expected of them under Art. 5(4). It is not the case that Booking cannot defend itself from free-riding, and it still does not open up opportunities for business users to contact end-users before the moment of check-in. Meaning: Booking will not share email addresses with business users, they must ask for these themselves. Moreover, Booking will not allow the internal chat functionality to be used to send payment links or QR codes, or to make competing offers in any way. They will only give phone numbers and allow contact through the internal chat functionality.
The Q&A can be summarized as follows:
“Can we have the email addresses earlier than check-in?”
“No”
“Why?”
“That is not required under Art. 5(4) DMA”.
…
“Can we have the email addresses earlier than check-in?”
“Still no”.
After this cycle had repeated a few times, there the Q&A evolved into attempts to receive more opportunities to contact users through the in-app chat functionality, questions about the validity of the free-riding defence, and questions about whether some uncommon reservation practices could grant access to the email addresses. The Commission had explained at the start of the workshop that it was not there to take sides, and it did not, it let the participants and Booking representatives tire themselves out before the lunch break.
Art. 5(2), Art. 6(9) Art. 6(10) DMA – Data obligations
The chosen data obligation compliance measures presented by Booking were Art. 5(2) DMA (cross-use of data) and the data portability obligations of Art. 6(9) and 6(10) DMA.
To comply with Art. 5(2) DMA, Booking took a fundamentally different route to compliance than its fellow gatekeepers. Instead of rolling out another controversial choice screen, Booking promised that it simply terminated any practice that would involve cross-use of data and updated its internal data management policies and system architecture. A luxury only of companies that do not heavily rely on personal users’ data a business model consisting of a deeply integrated ecosystem of services and data flows. Booking, so it states, keeps it different services strictly separate:
For compliance with Art. 6(9) DMA, Booking’s representatives proudly presented a new data portability API for travellers which allows them to either download their data to their devices or to port data directly to registered third parties. Such data includes search and booking history but also reviews and alike.
If travellers decide to download their data to their device can then log in to the Booking website or the app, and request data portability in the privacy and data management section. Download as ZIP folder or JPEG file will then be readily available. If you also think, why would end users, pardon travellers, ever do this? Then hold on, there is a second option which involves third parties who might actually see some business opportunities opening up here. Travellers can also port their data to registered third parties. While this sounds straightforward – the user journey presented by Booking may not be such as smooth ride, critic Tom Fish from the Coalition for Online Data Empowerment pointed out in the Q&A session. To make data available to third parties, travellers would need to log-in and authenticate on the Booking platform, copy a link, log-in on the third-party website and provide the link there. Only of course, if the third party has registered with Booking’s portal according to its T&Cs.
Compliance with Art. 6(10) DMA seemed to have been a piece of cake for booking who emphasized that it’s Booking’s core commercial interest to help their partners aka business users to fare better. Compliance measures for Art. 6(10) DMA are therefore a “WIN WIN WIN” situation for everyone involved: travellers, partners, and, yes, also Booking – as stated by a Booking representative during the workshop. Booking then presented an new range of tools and APIs, including lengthy demos, that would help their partners to access data to analyse their performance on the Booking platform in the various business segments:
Some Controversial Highlights
The workshop managed to raise some conflicting feelings as you were watching it unfold. The first, does anyone care about the designation of Booking? The Commission officials also did not have the same spark in their eye as when they were taking on giants like Apple or Google, and the stakeholders seemed more intent on what else they could get out of the changes than about the actual obligations imposed under the DMA. This also raises some follow-up questions: does Booking really not mind adhering to such a strict regulatory framework, or do the obligations in the DMA simply not harm them as much as one would think? Had they already given up on parity clauses long before the DMA came into force? Are they going to pivot into another business model (…online book selling)? Or, were we simply expecting more because of the fireworks of the first compliance workshops. Nobody has ever argued (at least to our knowledge) that Booking holds the economic power to undermine our democracy and institutions, so how can its designation be as exciting as that of Google or Meta. It could be that we are just settling into the routine of the DMA, we know what to expect, and the market likely won’t change overnight.
Besides this, it would have been a good idea to have a general discussion on “any other obligations” in the rest of the workshops as well. Two DMA obligations that draw a lot of attention in other gatekeepers’ workshops took center stage in the last session of the compliance workshop called “Other obligations”: The self-preferencing prohibition under Art. 6(5) DMA the prohibition to bundle own payment services under Art. 5(7) DMA. These provisions were not applicable according to Booking, but the German Hotel Association, the EU Hotel Forum and others disagreed. (Open) question of interpretation according to the Commission.
The skepticism towards Booking’s compliance with Art. 6(5) was based on Booking’s loyalty programs such as Genius for partners that pay more commission to Booking and are therefore treated more favorably on the platform. Even if Booking does not compete with hoteliers directly, can such loyalty programs be considered compliant with the second sentence of Art 6(5) DMA requiring transparent, fair and non-discriminatory ranking conditions? Yes, said Booking, because the second sentence of Art. 6(5) DMA is inseparably linked to the first sentence and there is no self-preferencing compared to hotels and Booking’s own services. Two different interpretations of the provision, declared the Commission with a sphinxlike face.
The Commission did the same thing regarding differing interpretations of Art. 5(7) DMA: Critics in the audience considered Booking’s pre-paid payment system Booking’s own payment service and complained about not accepting the hotels’ payment service choice on its platform in breach of Art. 5(7) DMA. Art. 5(7) DMA does not require gatekeepers to offer third-party payment services on its platform, Booking stated, but only to enable alternative payment services outside its platform. Again, the Commission acknowledged two differing views without disclosing its own.
While there is no other potential gatekeeper in sight (yet), all eyes are now back to the pending non-compliance investigations and specification proceedings. Whether or not Booking will join these ranks will have to be seen. However, looking at the most important points of contention in the workshop, it seems more likely (or recommendable) that the Commission will continue to focus on the larger gatekeepers, for which complaints about their compliance mechanisms have continued to mount.
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