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Regulation of Ranking Algorithms (EU Platforms Regulation)

Paul Foley
A high ranking in search engine results and on online intermediation services is/are increasingly central to discoverability and visibility online and hence the commercial success of a business. By obtaining an adequate understanding of how ranking functions, business users will be able to compete on a more level playing field when deciding their sales strategies.

Whilst the focus is currently on the Digital Markets Act (DMA) and the Digital Services Act, the often forgotten EU Platforms Regulation (my analysis HERE -> ) and the related EU Commission Guidelines on Ranking Transparency (2020/C 424/01) (Ranking Guidelines), are as important as ever, as amongst other terms, they regulate the provision of ranking services by providers of online intermediation services (POIS) to business users (as defined) and by providers of online search engines (POIS) to corporate website users (as defined — together “providers”). The DMA -> and the DSA-> build on the EU Platforms Regulation.

‘Ranking’ means the relative prominence given to the goods or services offered through online intermediation services, or the relevance given to search results by online search engines, as presented, organised or communicated by the providers of online intermediation services (POIS) or by providers of online search engines (POSE), respectively, irrespective of the technological means used for such presentation, organisation or communication (Article 2(8) EU Platforms Regulation).

One of the most important provisions of the Digital Markets Act (DMA) and which is relevant in this context is Article 6(5) of the DMA as follows:

"The gatekeeper must not treat more favourably, in ranking and related indexing and crawling, services and products offered by the gatekeeper itself than similar services or products of a third party. The gatekeeper shall apply transparent, fair and non-discriminatory conditions to such ranking".

Ranking services : the legal requirements (Article 5 EU Platforms Regulation)

POIS must set out in their terms and conditions, the main parameters that determine ranking and the reasons for the relative importance of those parameters as opposed to other parameters (Article 5(1)).

POSE must set out the main parameters, which individually or collectively are most significant in determining ranking and the relative importance of those main parameters, by providing an easily and publicly available description, drafted in plain and intelligible language, on the online search engines of those providers (Article 5(2)).

Where the main parameters include the possibility to influence ranking against any direct or indirect remuneration paid by business users or corporate website users to the respective provider, that provider must also set out a description of those possibilities and of the effects of such remuneration on ranking in accordance with the requirements set out in Articles 5(1) and 5(2) (Article 5(3)).

The descriptions referred to in Articles 5(1), (2) and (3) must be sufficient to enable the business users or corporate website users to obtain an adequate understanding of whether, and if so how and to what extent, the ranking mechanism takes account of the following:

  • (a) the characteristics of the goods and services offered to consumers through the online intermediation services or the online search engine;

  • (b) the relevance of those characteristics for those consumers;

  • (c) as regards online search engines, the design characteristics of the website used by corporate website users (Article 5(5)).

Where a POSE has altered the ranking order in a specific case or delisted a particular website following a third party notification, the provider must offer the possibility for the corporate website user to inspect the contents of the notification (Article 5(4)). Recital 26 of the EU Platforms Regulation explains that this obligation will help mitigate potential abuses that take the form of anti-competitive notifications, and that it reflects the potential difficulty POSE may face in notifying all relevant corporate website users in the absence of contractual relationships.

To facilitate the compliance by POSE and POSE with and the enforcement of the requirements of Article 5, the Commission will accompany the Article 5 transparency requirements with guidelines (Article 5(7)).

The EU Commission Guidelines on Ranking Transparency (2020/C 424/01) (Ranking Guidelines)

The references below to “par” or “pars” mean a paragraph or paragraphs in the Ranking Guidelines.

Pars 40 to 45 of the Ranking Guidelines provide general guidance for providers on selecting the main parameters. For example, in the case of corporate website users, the main parameters provided by the POSE could provide an adequate understanding of whether, and if so how and to what extent, certain design characteristics of the website used, such as their optimisation for display on mobile telecommunications devices, is taken into account (paragraph 45).

Specific considerations when identifying the main parameters

When conducting the necessary assessment to identify the main ranking parameters, providers and other parties could specifically take account of the following considerations:

Personalisation (pars 49 to 53). While personalised ranking of offers is a widely used feature, the parameters that personalise results are objectively determined beforehand even if their application results in one consumer seeing a different ranking compared to another consumer using the same online intermediation services or online search engine.

Predictability entails that providers of online intermediation services determine ranking in a non-arbitrary manner (recital 24 of the EU Platforms Regulation). Where this is a main parameter, an explanation of the use of personalisation, its key features as well as its impact on ranking, including the volatility (i.e. the extent of the difference in ranking for different consumers), could help improve predictability and avoid the risk of ranking being determined in an arbitrary manner. Providers may therefore have to reflect on how and if so, to what extent personalisation affects ranking in the case of their specific online intermediation services or online search engines.

Additionally, the Commission state that providers should consider whether and, if so, how consumers can and do use privacy protection settings on their services, given that the use of such settings can affect the possibility to personalise ranking.

Consumer search behaviour and intent (par 54). Where relevant for meeting the requirements of Article 5 (the required description of the main parameters), providers could consider how and if so, to what extent consumers’ search behaviour affects ranking, potentially as an element in personalised ranking.

User’s history (par 55). Where relevant to describing the Article 5 main parameters, providers should consider how a user’s history or past performance affects ranking. In mobile application stores, developers or publishers may be rated separately from their applications. For example, a newly launched application of an experienced developer with an existing offer in that particular application store, may perform better in ranking than the application of a newcomer developer. In this case, in as far as such factors constitute main parameters determining ranking, the provider concerned will have to ensure that business users understand that this is the case.

Default settings, sorting & filtering mechanisms (pars 56 and 57). As a type of personalisation, default settings (which can be rearranged, undone, or ‘overridden’ by consumers using sorting or filtering tools) can have an important impact on the ranking of offers of goods and services of business users. These mechanisms could be ‘main parameters’. If so, it can be important for business users to understand, for example, whether the ranking after application of the filter is based on all offers or if ranking then depends on whether the offer of goods or services meets certain criteria for inclusion, such as a minimum number of reviews in order for goods or services that are referenced under the default settings to be featured under a ‘quality’ filter.

Cross-platform presence (par 58). Business users often tend to simultaneously offer their goods or services across different online intermediation services in order to maximise sales (‘multi-homing’). Providers may consider the activities or the presence of business users on third party services an indicator of quality or relevance of business users on the online intermediation services in question. Where that is the case, and the relevance of this factor for ranking is such that it is to be considered a main parameter’, those providers should inform users that, and how, this factor is taken into account in ranking.

Other external factors (pars 59 to 61). Business users and the goods and services that they offer can also be assessed, using other factors that are external factors such as hotel star ratings, ‘brand appeal’ measured through surveys of fashion professionals, third-party trust marks awarded to a business users’ own retail webshop (e.g. ‘trusted store’) or industry awards (e.g. ‘best cafe in x’) or features in third-party media (e.g. newspaper reports or magazine features).These could be relevant for ranking as ‘main parameters’. If so, such factors have to be described, too.

However if for example, a privacy-rating assigned to websites on a privacy-focused online search engine are not taken into account,  the Article 5(3) description should be sufficiently clear so that users can understand that those other factors are not taken into account in ranking.

Providers should also consider, as a best practice, whether the Article 5(3) description should refer to the sectoral rules, which include rules of EU law and of national law reflecting various public interest objectives in various sectors.

Third party notifications (par 62). Where third party notifications about offers of goods and services are relevant to ranking as main parameters’, the descriptions given by the Providers concerned have to take account of this factor as well. For example: from a high volume of notifications arising from the providers’ policies adopted in relation to the types of illegal content to which third party notifications may relate.

Randomisation (par 63) Certain providers may use techniques to reorganise the relative prominence given to offers of goods and services (partly) in a random manner, for example, in order to refresh the look of a landing page. Where such factors constitute main parameters’, the providers should explain how such techniques are applied (by reference to when they are used, how long they are used, how significant the use is, etc.), as well as their impact.

Housekeeping/tidying up (par 64). Some providers may ‘treat’ or qualify offers of goods that have featured on their online intermediation services without being purchased for a long time as being ‘old’ and thus featured lower for the purposes of ranking. Where such factors amount to ‘main parameters’, a description of the relevant practices will need to be provided. This could be important for predictability purposes, not least given the practices’ potentially large impact on ranking and therefore on the business users’ commercial success.

Relationship with ancillary services (par 65) In certain cases, providers design their ranking mechanism so that the use by business users of ancillary services of the same provider (offered together with the relevant online intermediation services or online search engines, or those offered separately) can affect these business or corporate website users’ ranking. This situation can be an example of indirect remuneration, which requires an additional description pursuant to Article 5(3).

Yet even apart from that, the use of ancillary services can also be one of the main parameters that are used to determine ranking as referred to in Article 5(1) (POIS) and 5(2) (POSE). Where the use of ancillary services are part of the main parameters, providers have to explain, with an appropriate degree of detail, that this is the case, so that the users (business users or corporate website users) can decide whether to use such ancillary services, knowing that these ancillary services, for example, offer not just ease (i.e. all being available from the same provider in a ‘one-stop-shop’) but that their use may be important in optimising sales.

Note the Digital Markets Act (DMA) provides:

“The gatekeeper must not require end users to use, or business users to use, to offer, or to interoperate with, an identification service, a web browser engine or a payment service, or technical services that support the provision of payment services, such as payment systems for in-app purchases, of that gatekeeper in the context of services provided by the business users using that gatekeeper’s core platform services (Article 5(7) of the DMA)”.

Use of providers’ technical tools (pars 66 and 67). Some providers may offer technical tools to business users, possibly in return for remuneration and therefore will be subject to Article 5(3). The use or effect of such tools may also constitute a ‘main parameter’ within the meaning of Article 5(1) and (2) and therefore require to be described.

For example, in certain circumstances the use of a data analytics tool available on an online intermediation services or online search engine may enable users to significantly improve their ranking. In this case, in as far this factor is a ‘main parameter’, it will be important for providers to explain whether the effect on ranking is merely due to the insights gained and subsequently applied by business users, or whether it is the mere fact they use the analytics tool that is also taken into account.

Effect of machine learning (par 68).  Providers have to determine whether machine learning is a ‘main parameter’. Providers could focus on explaining the expected ‘amplitude’ i. e. size of the impact of machine learning on ranking. This may include whether it affects all main parameters equally and for example, give an indication of the timing and frequency with which machine learning may lead to main parameters’ changing. If such main parameters do change as a result of machine learning, providers need to adjust the description required under Article 5.

Evaluation of websites (pars 69 to 71). A POSE may take into account certain characteristics of websites, in order to evaluate them in terms of the trust they enjoy among users or their safety, authenticity, popularity or technological features. If a POSE does so, it should consider and explain to what extent its evaluation of a website’s characteristics affect ranking, to the extent that such factors constitute ‘main parameters’.

This may include, for example, how providers develop specific scores of websites calculated based on several variables, such as whether a website is trusted by users and whether it has a history of sharing links or misinformation. The quality of the content or how authoritative the website is may be relevant for its performance in ranking. Alternatively, the focus may be on the popularity of the website measured through, for example, the number of unique visitors and page views in a given period. Similarly, certain technical aspects may be taken into account for example, load speed, mobile-friendliness, domain age or security and accessibility of the website.

If certain characteristics of websites are more important than others, and the evaluation of these aspects is reflected in ranking to such an extent that it qualifies as a ‘main parameter’, this is important for users to understand. This should also be reflected in the level of detail that is provided in the description to ensure that users have sufficient clarity.

Measures taken to avoid third party bad faith manipulation of ranking results (pars 72 and 73). Providers tend to use sophisticated fraud prevention mechanisms, which may constitute main parameters’ under Article 5.  Providers should therefore carefully assess whether they need to describe the constituent elements of their fraud fighting mechanisms. Providers should at least inform business users and corporate website users about their existence and provide high-level information about how they can influence ranking: where these amount to main parameters’.

User reviews (par 74). If consumer reviews are a ‘main parameter’ for a given ranking mechanism, the providers concerned should include this factor in their descriptions required under Article 5 with a sufficient level of detail and clarity. For example, it could be explained that the reviews are generated on the relevant online intermediation service or online search engine, or, it may be reviews hosted outside those services. In such cases, it can also be important for business users and corporate website users to know what, if any, steps are taken to verify the veracity of such reviews.

Providers’ measures against illegal content (par 75). Where providers take measures to tackle illegal content online, they need to consider the effect that these measures may have on ranking and what may need to be included in the description of ‘main parameters’ required under Article 5. The effect on ranking can differ between providers, but in general both the presence and temporary presence of illegal content as well as the removal of illegal content can have a direct impact on the visibility of business users' legitimate offers. Where such measures amount to ‘main parameters’, in deciding what to describe, providers should consider what information and transparency about, for example, the types and prevalence of illegal content on the service in question could help business users better understand the functioning of the ranking mechanisms in question.   

Note the Digital Services Act (DSA) significantly augments the EU Platforms Regulation and the Ranking Guidelines on this point.

For my summary of the Digital Services Act requirements on illegal content, click HERE >

Direct or indirect remuneration, where such possibility constitutes a ‘main parameter (Article 5(3) of the EU Platforms Regulation). See Annex B of the Ranking Guidelines for examples of direct or indirect remuneration (pars 85 to 92).

In the impact assessment made by the EU Commission for the purposes of its proposal for the EU Platforms Regulation, a lack of meaningful accountability and predictability for business user and corporate website users with regard to the ranking mechanisms used by providers was identified.

In the case of paid ranking, it was recognised that businesses, and small businesses in particular, could benefit by understanding how these opportunities work. It could enable them to either choose not to participate, where the resulting ranking is unlikely to be satisfactory, thus saving them the cost of participation, or choose to participate, and gain increased exposure.

Direct remuneration is described as ‘payments made with the main or sole aim to improve ‘ranking.’ Providers thus should consider what opportunities are offered to users (corporate website users or business users ) to pay for improving their ranking and how any such opportunities operate. Examples of possible types of direct remuneration are set out in Annex B of the Ranking Guidelines (par 90) .

Indirect remuneration is described as ‘remuneration in the form of the acceptance by a business user of additional obligations of any kind which may have this improved ranking as its practical effect’. Providers thus should consider what opportunities are offered to business users that could have the practical effect of improving ranking in return, and how any such opportunities operate (par 91).

The use of ancillary services such as payment, fulfilment, etc. by business users could have an impact on the ranking of their goods or services, for a variety of reasons. The description required pursuant to Article 5 should include these possible uses of ancillary services where they involve indirect remuneration within the meaning of Article 5(3) and constitute ‘main parameters’ (par 92).

In particular, where any or all of these effects on ranking result from the mere participation of the business user in a particular ancillary service - in isolation of any indirect effect the ancillary service may have on the user’s performance measured by other parameters - the additional obligations of Article 5(3) may apply.

Business users should reasonably be able to decide whether or not to invest more in particular elements of their goods and services and to make a better determination of whether and if so, how to invest in ‘ranking strategies’.

Presentational tools (pars 106 to 109). The Ranking Guidelines suggest, to explain the effect of ‘direct and indirect remuneration’ on ranking in situations where this constitutes a ‘main parameter’, a written explanation could, for example, be combined with technological tools such as a dynamic simulator of the anticipated effects of remuneration on ranking and the extent of its effect.

The Ranking Guidelines further suggest that Providers may want to consider using available tools or testing a possible approach with a panel of users to ensure that the description is understood in the way it is intended, or incorporating a means to obtain feedback from users on whether the description is useful and contains the rights amount of detail. Another way to get this feedback can be to test the description with a representative panel of users. While not specifically required, such measures may help ensure that providers comply with the requirements of Article 5.

Where main parameters should be described (pars 113 to 117). In the case of POIS, providers could consider establishing a single touchpoint (for example in a user ‘dashboard’) that could reference or index all the relevant informational tools available to explain ranking transparency. Alternatively, the information could be duplicated across different informational tools – provided that the legal requirements of Articles 3 and 5 of the EU Platforms Regulation are met (par 113).

Note the terms and conditions of POIS must be easily available to business users at all stages of their relationship, including before they enter into a contract with those providers (Article 3(1)(b)). Therefore, all of this information should also be available to prospective business users (par 114).

In the case of POSE, Article 5(2) requires, POSE to provide ‘an easily and publicly available description (…) on the online search engines of those providers’. This entails that the description is placed in an easily accessible location on the online search engine’s webpage. This may be an area that does not require users to log in or register to be able to read the description.

Within the limits set by Article 5(2), it is for the provider of online search engine to assess and decide where it provides the required description on ranking. In making that decision, the provider could consider how users of its service behave to find a solution that matches this behaviour. For example, if users use the service as it provides a result in one click, the same principle could be applied to the description. This could mean that if a description is accessed via a link, the link should lead directly to the description and not require further navigation to find it (par 117).

Changing the ranking parameters. The Ranking Guidelines finally set out the requirements on (i) keeping descriptions of main parameters up to date (pars 120 to 122) (ii) temporary changes (pars 123 to 125) (iii) Experiments (pars 126 and 127) and (iv) requirements for POIS to notify changes (pars 128 to 131) and (v) search engines to keep descriptions up to date (pars 132 and 133).

Augmentation by the Digital Services Act (DSA) and the Digital Markets Act (DMA). The EU Platforms Regulation and the Ranking Guidelines are augmented by the DMA -> and the DSA->.

Copyright © Paul Foley January 2023 - All Rights Reserved.

Owner, Paul Foley Law

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