Digital content material, platforms and markets – UK and EU 2020 roundup
In 2020 there was a real push to regulate online content and platforms in the UK and EU. While many initiatives are in their early stages, others have been introduced and further changes are inevitable. This is a crowded space, but here are some of the highlights of 2020.
Company regulation platform
As mentioned earlier, the company regulation platform came into effect on July 12th. The aim is to correct a perceived imbalance in the relationship between online platforms and the companies that offer goods and services on them, as well as between online search engines and the websites that appear in their listings, especially in terms of ranking.
UK Business Online Recruitment Services (Enforcement) Regulation 2020 came into effect at the same time as the regulation and provides for judicial enforcement. There will be no regulatory agency in the UK for compliance purposes, although the P2BR has the option to appoint one. The regulations confirmed that the P2BR will maintain the law after Brexit.
The EC published a series of Q&A to provide guidance on how to implement the requirements of the P2BR, which the legislation can capture and benefit from and enforce. The EC guidelines will apply to the whole of the EU, including the UK, until the end of the transition period. It will continue to be of help to UK businesses after the transition but should be read carefully given the changes made to post-Brexit legislation in the United States. In particular, the section on public bodies taking action against OIS providers or search engines will no longer be relevant after the implementation period has expired.
UK Digital Services Tax
The UK Digital Services Tax (DST) has been in effect since April 1st, 2020. It is a 2% tax on companies with annual worldwide sales of over £ 500m and more than £ 25m in annual sales with the provision can be achieved by social media services and internet search engines or online marketplaces for UK users. The first £ 25m revenue from UK users is excluded. The tax applies to sales, not profits. It applies to global group revenues. Therefore, the thresholds should be calculated at the group level. However, liability is at the company level, and groups must designate a company to meet reporting requirements.
OECD digital tax proposals
The OECD conducted a consultation on model rules for tax reporting for online platforms. The idea is that model rules could be adopted by jurisdictions in order to collect information on transactions and revenues generated by online platform operators on a consistent basis. The rules target transactions on “platforms” which are currently defined to cover all software products that users can access and which allow sellers to be connected to other users in order to provide certain services. It includes associated services such as payment processing services, but not platforms that only offer the operator’s own services. In July, the OECD published model rules for reporting by platform operators on sellers in the sharing and gig economy, as well as a code of conduct for cooperation between tax administrations and sharing and gig economy platforms. If the proposals are accepted, it will place a significant compliance burden on platforms in participating countries. The UK has announced that it will check daylight saving time if an international system is put in place.
EC law on digital packages and digital services
In March, we discussed the EC’s plans to create a “Europe fit for the digital age” that covers a wide range of areas, from AI to data to plans to regulate platforms and protect consumers. Since then, she has published her new consumer agenda and a draft Data Governance Act. At the time of writing, the Digital Services Act package is expected shortly, which will have a significant impact on online operators and those affected by their activities. Leaked documents gave us more of an indication of what to expect in October.
CMA calls for a new regime to combat dominance by technology giants
As we reported in July, the CMA published its final report following its market study on online platforms and digital advertising. She called on the government to introduce a new pro-competitive regulatory system to combat dominance by Google and Facebook and regulate the behavior of major platforms funded by digital advertising.
The CMA, Ofcom and the ICO have set up a Digital Markets Taskforce (DMT) that builds on the conclusions of the market study and advises the government on the design of a new regulatory system for online platforms. The government announced in November that it would set up a digital markets division to oversee an anti-competitive regime for platforms, including those funded through digital advertising. It will create a new legal code of conduct to give consumers more choice and control over how their data is used and to help SMEs promote their products online. The Code will also support the sustainability of the news publishing industry in order to rebalance the relationship between publishers and online platforms. The new unit, which will start operating in April, could be given significant enforcement powers.
Previously, the CMA published its response to the EC consultations on the Package Digital Services Act, citing its own recommendations, which are similar. It will be interesting to see how the UK and EU initiatives are keeping up.
In February, the government published its first consultation response to its online White Harms paper. A final report was expected in spring 2020, but did not materialize. We currently expect: Codes of Conduct on Terrorism and CSEA by the end of 2020 or early 2021; the government’s final response to the OHWP consultation before the end of 2020; and draft law in spring 2021.
The EU is also working on this issue. The European Commission’s proposal for a regulation to prevent the spread of terrorist content on the Internet includes a one-hour shutdown requirement for hosting service providers, proactive filtering measures and a duty of care. Meanwhile, the Digital Single Market (Copyright) Directive removes Safe Harbor protection for providers of online content sharing services and calls on them to take additional steps to benefit from defending against copyright infringement in their services. The EU announced further plans to combat online damage in its digital package.
Case on the role of “intermediaries” introducing individuals to end users
In October we dealt with a significant ruling that potentially affects all businesses, including platforms in the UK that act as middlemen and importers who allegedly import self-employed individuals on market terms. An appeal is lodged against the decision.