IEIM901200 - Platform Operators

A Platform Operator (PO) is defined in the Model Rules as “an Entity that contracts with Sellers to make available all or part of a Platform to such Sellers”. This includes entities that make the software of a Platform available to Sellers as well as entities which collect payments from users.

An “Entity” is defined in the Model Rules as “a legal person or arrangement” which covers corporate entities but does not extend under UK law to partnerships, trusts and other arrangements which are not legal ‘persons’. The definition is therefore modified by Regulation 2(4)(c) which replaces the reference to an “Entity” with “a legal or natural person, other than a person carrying on a business as a sole trader”. This modification means that partners, trustees and similar ‘natural persons’, who act on of behalf of partnerships, trusts and other arrangements that are not recognised under UK law as legal persons are within scope of the reporting rules. [For convenience, references to a ‘Reporting Platform Operator (RPO)’ in this guidance refers to the modified definition in Regulation 2(4)(c) unless otherwise specified.]

Individuals who operate a Platform as a sole trader and contract with Sellers to make it available to Sellers and other users are specifically excluded.   

POs assume various legal responsibilities in respect of their Sellers, including contractual obligations for Sellers to provide information, so they should be well placed to comply with the due diligence, reporting and other requirements of the rules.

Some Sellers may use a number of different Platforms to provide goods and/or services to users. Where the Platforms used are different, each Platform will have a PO and that PO will be responsible for collecting, verifying and reporting the required information in respect of the activities carried out by the Seller using that Platform.

Where a Seller uses a single Platform but there are multiple entities which operate the Platform, the PO will be the one which contracts with the Seller to use the Platform even if this is not the same entity as the one which makes the Platform available to the Seller.

For example, a Platform is operated by three entities. The first entity provides the Platform software, the second entity processes payments and the third entity is responsible for onboarding Sellers. The PO is the entity that contracts with the Sellers allowing them to use the Platform i.e. the entity that is responsible for onboarding Sellers.

Where a Platform provides software or an app that can be used by other entities and Platforms to facilitate the provision of goods/services by Sellers, the PO is the entity that contracts with the Seller, even if this is not the same as the Platform or entity which owns or operates the Platform.

For example, a hotel group provides a reservation system (Platform) to book rooms in various hotels owned by Sellers who provide accommodation to guests. The Platform is also used by travel agents and online booking companies to book rooms. The hotel group uses company A to provide and operate the reservation system, and company B to make contractual arrangements with the hotel owners to make the rooms available. The PO with respect to the hotel owners (Sellers) will be company B.