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Digital Business Lawyer

EC identifies areas of action in DSM mid-term review

The European Commission (‘EC’) published on 10 May 2017 its mid-term review of its Digital Single Market Strategy, which identifies three areas for further action: addressing cyber security, clarifying rules on the cross-border flow of non-personal data, and promoting fairness and responsibility of online platforms, both in terms of illegal content reporting/removal and platform-to-business trading practices. The EC’s plans include measures to secure ‘connected objects,’ draft legislation on cross-border free flow of non-personal data, and a focus on the “procedural aspects and principles on removal of illegal content - notice and action - based on transparency and protecting the fundamental rights.”

“Whether or not (and what) action is needed will depend on your perspective,” said Ben Allgrove, Partner at Baker McKenzie. “For example, online intermediaries would no doubt argue that they are doing all they reasonably can, while at the same time respecting user privacy, freedom of expression and their own legitimate commercial interests, which the CJEU has confirmed are interests that legally need to be balanced when making decisions about content online. In my view, the key thing missing in the EU compact is a Good Samaritan principle - namely saying to online platforms that if you take reasonable steps to police illegal content on your platform, you will not be inadvertently penalised by losing the E-Commerce Directive safe harbours.”

“It is and will be a huge challenge to implement regulations which are not already outdated when they come into force,” notes Dr Torsten Kraul, Partner at Noerr LLP. “Digital transformation is a large field, and one difficulty is not to get lost in minor details rather than creating a positive and level playing field [on a larger scale].”

The EC intends to target through its work during 2017 unfair contractual clauses and trading practices in platform-to-business relationships, following concerns raised by EU companies. The EC says its actions could, “on the basis of an Impact Assessment and informed by structured dialogues with Member States and stakeholders, take the form of a legislative instrument.” The EC’s research in this area revealed inter alia concerns about the ‘delisting’ of products and services without sufficient notice or opportunity to contest removal.

“The initiative on contract clauses and trading practices may force platforms to provide more transparency when it comes to market access,” said Daniel Widmann, Lawyer at Pinsent Masons. “This will become especially relevant where platforms both facilitate market access and compete at the same time with suppliers, which may lead to platforms unfairly promoting their own services to the disadvantage of these suppliers. Under the EC’s new initiative, such unfair promotion of the platforms’ own services and discrimination regarding access shall be combatted with regulatory and non-regulatory measures.” Dr Thomas Funke, Partner at Osborne Clarke, adds that “The regulators’ ambition is to protect competition to the benefit of consumers. However, authorities need to assess with care whether a current market position really requires government intervention or whether disruptive innovation will ensure competitive markets in the long run.”

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