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This alert provides an overview of key technology regulation developments in the UK and EU across the topics of online safety, online harms, digital services and digital content.
An update on the Online Safety Bill
The Online Safety Bill has returned to Parliament this week after a 5-month postponement. The so-called "legal but harmful" category has reportedly been removed from the Bill, although firms subject to the new rules will still need to protect children and remove content that is illegal or prohibited in their terms of service. The changes to the Bill are said to offer users a ‘triple shield’ of protection when online: social media firms will be legally required to remove illegal content, take down material in breach of their own terms of service, and provide adults with greater choice over the content they see and engage with. Exposure to financial penalties under the Bill will remain high with the maximum fine in the bill currently drafted as 10% of the platform's annual worldwide revenue.
The evolving data protection framework in the United States
Since the introduction of the GDPR, there has been an increased interest in consumer data protection and privacy around the world, as seen for example with the introduction of new laws such as Brazil’s General Law for the Protection of Personal Data. California was the first US state to act, and the California Consumer Privacy Act (the CCPA), a landmark legislation inspired by the GDPR that grants California residents increased transparency and control over how businesses collect and use their personal information. The privacy framework in the US is rapidly evolving, with more US states introducing comprehensive data privacy laws. After years of unsuccessful attempts, the American Data Privacy and Protection Act is the furthest a federal data privacy bill has managed to go so far.
ICO and Ofcom strengthen partnership on online safety and data protection
The Information Commissioner's Office (the ICO) and Ofcom have issued a joint statement on how it will work together to ensure coherence between data protection and the new online safety regimes. The statement is in anticipation of Ofcom taking on new duties in 2023 under the Online Safety Bill and sets out their shared regulatory aims. The two bodies wish to maximise coherence by ensuring their policies are consistent and promote compliance by setting clear expectations for industry.
Children – their data and safety online
California has now passed the Age Appropriate Design Code Act into law, which is very similar to the UK equivalent, but with some important differences particularly on the timing of completing DPIAs and connected toys.
Mobile browsers and cloud gaming
On 22 November 2022, the Competition and Markets Authority (the CMA) published its decision to open an in-depth investigation into competition in the UK’s cloud gaming and mobile browsers markets. The CMA's decision follows a yearlong study into the mobile ecosystems in the UK, which found that Apple and Google have an effective duopoly on mobile ecosystems that allows them to exercise a stranglehold over operating systems, app stores and web browsers on mobile devices. Market investigations generally must be completed within 18 months, though the CMA has the power to extend this period by a further six months in certain circumstances. If the investigation finds adverse effects on competition, the CMA has the power to impose its own remedies on businesses and it can also make recommendations to other bodies such as sectoral regulators or the government, when legislation might be required for example.
The Digital Markets, Competition and Consumer Bill
The Digital Markets, Competition and Consumer Bill (the Bill) is set to implement the UK Government's digital markets strategy. The Bill is expected to (a) give powers to the Digital Markets Unit (DMU), which will be responsible for enforcing a new code of conduct for digital firms deemed to have "strategic market status", (b) tackle so-called "subscription traps" through changes to the consumer laws applying to subscription services, (c) introduce direct fining powers for regulators in relation to breaches of consumer law, and (d) update various aspects of the UK's merger control regime in relation to tech acquisitions. The Bill represents a leap forward in competition and consumer law enforcement against digital firms, with the UK finally presenting its own version of the rules that are set to apply to "Big Tech" under the EU's Digital Markets Act. The Government's Autumn Statement on 17 November 2022 confirmed that the Bill will be brought forward in the third Parliamentary Session (i.e. in early 2023).
On 10 November, the European Parliament has adopted their latest resolution on e-sports and video games. The Resolution sets out various ambitions in relation to the video-game industry and highlights the need for greater transparency surrounding loot boxes. While e-sports is still at an embryonic stage of development, the sector’s ability to offer educational benefits in school environments and the development of skills essential in a digital environment were also emphasised. The European Parliament's recognition that video games are an integral part of Europe’s cultural heritage comes at a time where the ever-increasing size of the video games and e-sports sectors is butting up against the prospect of increasing regulation of digital products and services more generally. The Resolution may encourage the Commission to propose relevant initiatives in this field. While we await more details in the New Year, those in the sector should not be led into thinking this is time for hibernation, but rather should busy themselves with planting seeds for the future.
Fake Online Reviews: the crackdown in Europe and Beyond
Fake online product reviews are misleading consumers and in some cases breaching consumer protection laws. Official figures from the World Economic Forum have shown that 4% of all online reviews are fake and that the direct influence of misleading reviews on global spending is $152 billion. National watchdogs have already begun investigations into a number of major players in the digital space and, in the coming months, companies trading across different regulatory regimes will face many challenges when carrying out their operations. Enforcement actions are likely to arise from national authorities but also from competitors as well as consumer protection agencies. The potential costs of enforcement by regulators, litigation by competitors, as well as reputational damage should not be underestimated, and underline the need for businesses to maintain protocols to identify, address, and mitigate their impact.
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