New gatekeeper on the horizon: stricter competition rules will apply on Booking.com

The European Union’s competition legislation has undergone a major transformation in recent years, particularly in digital markets and large online platforms. The new regulatory framework has been introduced by the European Commission to deal with the increasing concentration and distortions of competition in digital markets. Large online platforms such as Google, Amazon, Facebook and Booking.com have become key players with a significant impact on the functioning of the market and the opportunities for smaller competitors.

Key elements of the new regulation include the Digital Markets Act (DMA), which aims to ensure that markets operate fairly, prevent abuses by dominant players and promote innovation. At the centre of the DMA are the so-called “gatekeepers”, who are dominant players in the digital ecosystem and therefore have a special responsibility to maintain fair competition. For the hotel industry, the situation of Booking.com has particular interest, as it now has to comply with new requirements, since the European Commission designated the Dutch-based company as a gatekeeper on 13 May 2024.

Last year, Booking.com became embroiled in a wide-ranging scandal in Hungary over fraud and debts of several billion HUF. The Hungarian Competition Authority (GVH) launched an accelerated sector inquiry at the end of August 2023 into the large number of complaints received from the Hungarian online accommodation booking and services market, mostly concerning Booking.com. Subsequently, on the basis of Booking’s self-assessment of 1 March 2024, which found that Booking meets the relevant thresholds, the Commission concluded that this essential platform service represents an important gateway between businesses and consumers. According to the Commission, Booking.com’s role as a gatekeeper is underpinned by, for example, its dominant market position, the fact that the platform collects a huge amount of data on guests and accommodation that it can use to improve its own services and maintain a competitive advantage, and the platform’s strong influence on consumer decisions.

In practice, Booking.com’s gatekeeper status means that it must ensure that users have free access to offers outside its app stores. They also need to eliminate closed technological systems that steer consumers towards using the products or services of a single company. Booking.com must increase transparency, clearly informing hotels and guests about how the algorithms that determine search results and rankings work. The use and sharing of data will also be subject to stricter regulation to prevent anti-competitive practices. The company must ensure that all properties are treated equally, regardless of the commission they pay to the platform. In addition, the DMA prohibits the use of exclusivity clauses that require hotels not to offer better rates or conditions through other channels. In addition, Booking.com must implement an effective complaint handling mechanism that allows hotels and guests to resolve their complaints quickly and efficiently.

The aim of the regulation is to moderate content to allow fair competition and make it easier for consumers to switch between services. Following the EU’s decision, based on Booking.com’s self-assessment submitted on 1 March 2024, the Dutch company has six months to comply with the obligations arising from the regulation and offer end-users more choice on its online platform.