Legal forecast of the Technology Sector in 2020

As we enter the new decade, we look at some of the legal trends and make some predictions on what will be impacting the technology sector in 2020.

Cybersecurity:  Cybersecurity will continue to dominate the headlines with more businesses suffering breaches and receiving substantial fines from regulators.  In 2019, the ICO announced that it intended to fine BA £183.39 million and Marriot £99.2 million for data protection breaches and in the US eye watering fines were handed out to Facebook and Equifax.  Cybersecurity is no longer just a data protection issue, with businesses needing to take a holistic approach to cybersecurity from insurance coverage to directors' duties.  For more detailed commentary read the below articles:

• Why phishing is one of the biggest and most overlooked cybersecurity threats
• Cyber security: How to avoid a disastrous PICNIC
• Cyber security due diligence in M&A transactions
• Indemnities for cyber risks - a customer viewpoint
• Security in the supply chain – a post-GDPR approach
• Indemnities for cyber risks – blank cheques that your insurance may not cover

Artificial Intelligence: While AI was the buzz word in 2019 (even if it was regularly misused), robotic process automation was being more widely adopted in the industry.  Expect this to continue with businesses becoming used to contracting for RPA and AI solutions, customers getting more comfortable with accepting and managing the risks and suppliers willing to commit guaranteed savings through automation. 

Sustainability:  In 2019 we saw Greta Thunberg and Extinction Rebellion hitting the headlines, with even the outgoing head of the Bank of England, Mark Carney, issuing his own warning.  Consumer businesses will see more pressure from consumers to validate their green credentials which in turn will drive businesses to scrutinise the green credentials of their supply chain.  Expect to see more contractual commitments focused around sustainability being dropped into supplier contracts.

Brexit: Whatever your view, it's fair to say that December's election settled the 'will they won't they' debate.  It now appears certain that we will leave the EU on 31 January 2020 and enter an 11 month transition period.  During this transition it will be broadly business as usual in the tech sector with EU law continuing to apply during this period.  By 31 December 2020 the UK Government wants to have agreed a free trade deal with the EU and the Chancellor, Sajid Javid, has confirmed that 'things are going to look different for business after this point'. Something which has received little airtime is the UK's relationship with third party countries.  From 31 January 2020, the UK will fall outside the EU's trade deals with these countries and frantic negotiations by the UK are currently ongoing to put arrangements in place.  Current status: UK trade agreements with non-EU countries in a no-deal Brexit.

Privacy:  Will this be the year we finally see the EU e-privacy regulation passed into law?   Having already seen numerous delays we're not holding our breath and, even if it is agreed in 2020, a 2 year transition period will then apply.  On the Brexit front, come 31 December 2020 the UK will need an adequacy decision from the EU in order to maintain data flows with the EU.  With a small EU adequacy team and a number of other priorities during 2020 a positive UK adequacy decision is not a slam dunk by the end of the year.  If so, things will start to become more complex for businesses: Complying with data protection law in the UK after the end of December 2020 – a game of three-dimensional chess?

New Regulations:  Less of a prediction and more of a certainty, 2020 will see a number of new pieces of legislation coming into force which will impact the tech sector.  For example:

• In July 2020, the online intermediary services regulations will come into force and place new requirements on search engines and businesses operating platforms through which other businesses trade.
• By September 2020, the UK will need to have implemented the new Audio Media Services Directive which covers things like protection of minors from harmful content and rules on advertising.
• By the end of the year, payment service providers will need to have applied strong customer authentication to online payments.

Tech Regulator: An array of regulatory initiatives and investigations is likely to impact the tech sector in 2020.  The Furman Review has recommended reforms to give consumers greater control over their data to address what it considers is "Big Tech's" problematic grip on advertising revenue; the Online Harms White Paper proposed a duty of care on companies that will allow users to share or discover user-related content (as well as establish a new tech regulator); and, CMA's market study into digital advertising confirms that the most likely next step in this area will be regulatory reform.
Competition and Technology: With Margrethe Vestager now in charge of the EU Commission's digital strategy as well as competition enforcement, we are likely to see ongoing focus on the way the Facebook, Google and others collect and use data.  There have already been numerous antitrust investigations at EU and national level resulting in fines of several billions, but the feeling amongst regulators that something more fundamental must be done.  This could include reforming anti-trust rules for the tech sector and adapting enforcement practice to take account of potential future competition.  

Employment: In 2020, IR35 will come into force for the private sector and many tech businesses will be required to grapple with questions of the status of their independent contractors, making status assessments mandatory and shifting the tax burden to end users. That's likely to constitute a double hit for those in fast-growing tech industry who may have limited other resourcing options. For more details on the employment law implications of IR35, please see our publications:

• IR35: Don't forget about employment law
• ​Changes to off-payroll working in the private sector

Advancements in AI and RPA platforms mean solutions promising more efficient evidenced-based assessments on candidate selections, retention and termination will be more readily available. Employers will need to balance the undoubted upsides against the risks of inherent bias in datasets and the potential for discrimination claims and negative publicity. Read more information on the relevant guidelines in this area: Coding ethics into AI? Algo along with EU.

Investment in Tech: The enthusiasm for innovation across all tech sectors (for instance in EdTech and MedTech) and the continually increasing numbers of new investment funds, trade buyers and individual investors will see increasing investment in technology-driven businesses. In the digital entertainment and games sectors, the ever increasing demand for content will see companies acting like investment funds with a buy-and build strategy.  New businesses connecting to the near 4bn mobile handsets will proliferate and dominate the consumer facing industries.  On the macro level, enabling technologies like cloud computing, data storage, location based services and server technology will continue great growth, consolation and b2b investment activity.
Of course, in an industry worth over $5 trillion that now impacts almost every part of our lives, this list is never going to be exhaustive and we'll see further sector specific trends, from batteries to networks to renewable tech.  What's your view on the legal issues impacting tech in 2020 and what are your priorities?  Do you agree with our list or are there other trends that should be on tech businesses' radar for 2020? Get in touch with the Fieldfisher technology team to discuss or for more information on any of these topics.

Insight provided by John Brunning, and John Cassells