This Week’s Techlaw News Round-Up

November 24, 2023

UK law

Online Safety Act 2023 (Commencement No 1) Regulations 2023 made

The Online Safety Act 2023 (Commencement No 1) Regulations 2023 (SI 2023/1242) have been made. They brought sections 114(2) and (7) of the Online Safety Act 2023 into force on 22 November 2023. Section 114(1) of the Act grants Ofcom an express power to co-operate with an overseas regulator, including by disclosing online safety information to that regulator, for the purposes of (a) facilitating the exercise by the overseas regulator of any of that regulator’s online regulatory functions or (b) criminal investigations or proceedings relating to a matter to which the overseas regulator’s online regulatory functions relate. Section 114(2) of the Act provides that Ofcom’s power to co-operate only applies in relation to an overseas regulator specified in regulations made by the Secretary of State. Section 114(7) of the Act defines certain terms for the purposes of section 114, including the terms “online regulatory functions”, “online safety information” and “overseas regulator”.

Digital Markets, Competition and Consumers Bill passes third reading in House of Commons

The Digital Markets, Competition and Consumers Bill has completed the Report stage in the House of Commons and passed its third reading. It receives its second reading in the House of Lords on 5 December 2023.

UK government tables amends to Data Protection and Digital Information Bill

The government has tabled some amendments to the Data Protection and Digital Information Bill. These aim to improve data security, bolster national security and prevent fraud. They include new powers to require data from third parties, such as banks and financial organisations, to help reduce benefits fraud. In addition, they include a “data preservation process” which would help require social media companies to keep any relevant personal data of children who have died through suicide to help in subsequent investigations or inquests. It also includes rules on the use of biometric data by the Counter Terrorism Police. Report stage is due on 29 November 2023.

ICO warns UK websites to make cookie changes

The Information Commissioner has warned certain online platforms that they face enforcement action if they do not make changes to comply with data protection law. It says that some websites do not give users fair choices over whether to be tracked for personalised advertising. The ICO has previously issued guidance that organisations must make it as easy for users to “Reject All” advertising cookies as it is to “Accept All”. Websites can still display adverts when users reject all tracking, but must not tailor these to the person browsing. The ICO has now written to companies running many of the UK’s most visited websites setting out its concerns and giving them 30 days to ensure their websites comply with the law.

CMA issues update on AI foundation models

The CMA has issued an update on its work on AI foundation models. Since the publication of its report on 18 September 2023, it has begun a further programme of engagement, in the UK, US and elsewhere, to gather views on the report and proposed competition and consumer protection principles, which aim to guide the development of these markets. It plans to publish an update in March 2024 which will include reflections on further developments in the market and the impact they may have from a competition and consumer perspective; its thinking on the proposed principles, how they have been received and whether they have been reflected in companies’ actions; an update on how developers of foundation models are accessing key inputs, such as expertise, data and computing power, including through investments, mergers, acquisitions and partnerships; and consideration of the role AI semiconductor chips play in the foundation model value chain. In addition, the CMA will continue to work closely with its Digital Regulation Cooperation Forum partners.

CMA calls on Wowcher to change its online sales practices

In March this year, the CMA launched an investigation following concerns about Wowcher’s online selling practices, including whether its “urgency claims” were misleading shoppers and could break consumer protection law. Wowcher’s website features extensive use of countdown clocks and marketing claims such as “Running out!” or “In high demand” which create an impression of urgency and influence shoppers as they are making their purchasing decisions. The CMA has found evidence that these claims risk giving the misleading impression that products will increase in price or will not be available, when this is often not the case. Such claims, especially when used with countdown clocks, can put pressure on shoppers to buy quickly for fear of missing out, leading to rushed purchases. The CMA is also concerned about other practices used by Wowcher, including hidden charges and the use of a pre-ticked box to enrol customers into VIP memberships on Wowcher’s site, which may lead to additional unintended purchases by consumers. The CMA has now written to Wowcher detailing its concerns and outlining the ways in which the company can formally address these. Wowcher may now respond and avoid court by signing undertakings to change its online sales practices.

CAT rules Sky Pay TV service is electronic communication service

In Sky UK Ltd v Office of Communications [2023] CAT 70, the Competition Appeal Tribunal (CAT) ruled that Sky’s Pay TV service of any of the types in subsection 2A provided by means of an electronic communications network, except insofar as it is a content service. Sky had appealed an Ofcom decision regarded end of contract notifications saying that its service was not a public ECS as it did not consist “wholly or mainly” in the conveyance of signals. Therefore the end-of-contract notification provisions did not apply as required by Ofcom’s licence conditions. The CAT rejected these arguments. It said that the Sky Pay TV service was a unified service provided under a single contract rather than a bundled service, and it was a transmission system used for broadcasting within section 32(2A)(c) and, as such, was a service consisting in or having as its principal feature the conveyance of signals. As such, it was an ECS.

HMRC issues guidance on tax reporting by digital platforms

HMRC has updated its International Exchange of Information Manual to include a new chapter providing guidance on the tax reporting rules for digital platforms provided for in the Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023 (SI 2023/817). The Regulations implement the OECD’s model tax reporting rules for digital platforms in the UK.

Call for Evidence – National Security and Investment Act

The government has launched a call for evidence on the National Security and Investment Act. It has asked how the NSI regime could be more business friendly while maintaining protection for national security. It will consider changes to the NSI regime based on feedback. In particular, the evidence will help the government hone the scope of the system’s mandatory notification requirements; improve NSI notification and assessment processes; and develop the government’s public guidance and communications on how the NSI Act works and where the government tends to see risk arising. The call for evidence ends on 15 January 2024.

UK government responds to Committee report on draft Media Bill

The Culture, Media and Sport Committee has published the government’s response to the Committee’s draft Media Bill report. The Bill was introduced to Parliament earlier this month after its inclusion in the King’s Speech. The Secretary of State confirmed that the Government has accepted the majority of recommendations made by the Committee after its pre-legislative scrutiny of the Bill. The Committee’s first report relating to radio called for measures to address the risk to the industry of larger platforms controlling access to stations and driving listeners elsewhere. A further report on the wider provisions in the Bill included the recommendation that obligations on smart TVs, firesticks and set-top boxes to ensure public service broadcasters are prominent on their platforms should be strengthened.

Government responds to AI governance challenges in House of Commons Committee interim report

On 16 November 2023 the UK government announced its progress against the 12 AI governance challenges and recommendations that the House of Commons Science, Innovation and Technology Select Committee’s interim report recommended should be addressed to secure public safety and confidence in AI. It has also confirmed: greater emphasis on digital skills within schools and opportunities for adult retraining in STEM subjects such as AI, cybersecurity and data analytics; that no AI specific legislation will be introduced immediately, and that DSIT will work with other government departments to develop the UK regulatory approach, including risk monitoring activity to co-ordinate mitigations; the members of the Frontier AI Taskforce (now renamed as the AI Safety Institute) and its terms of reference. The government confirms its remit is to enable the safe and reliable development and deployment of advanced AI systems; continued involvement in international AI safety initiatives including the G7 Hiroshima AI Process, the UN’s global digital compact and international standards development; and its attendance at future AI summits in South Korea and France following the hosting of the AI Safety Summit at Bletchley Park.

Response issued to pro-innovation regulation of technologies review on advance manufacturing

The UK government has also issued its response to the pro-innovation regulation of technologies review on advance manufacturing conducted by Professor Dame Angela McLean. It has accepted the recommendations. In particular, these include technical standards – the government accepts that it should work with the UK National Quality Infrastructure and UK industry and academia to shape global technical standards to achieve interoperability in key technologies, with a particular focus on cybersecurity. It also includes collaborative robots (cobots). The government, along with the Health and Safety Executive and British Standards Institution, will review how standards for the use of cobots in manufacturing could be developed or updated to assist in demonstrating legal compliance and reducing duty holder uncertainty. The full scope of this work will include issues of risk assessments and liability. It also considers the Supply of Machinery (Safety) Regulations 2008. The government accepts the need to review these Regulations as they apply in Great Britain, to ensure they are fit for the digital age and meet the needs of UK consumers and businesses. Finally, it will work with relevant bodies to develop repair, reuse and recycling technology for composites, develop common standards around what constitutes a mass balance approach in chemical recycling, and explore the design, manufacture and use of more efficient, safe and sustainable chemicals.

Ofcom launches consultation on future phone-paid services regulation

Consumers can access a range of interactive services via their landline and mobile phones, computers and digital TV. Where these services are charged for via the customer’s telephone bill, they are known as phone-paid services. They are also commonly referred to as premium rate services (PRS). The consultation sets out Ofcom’s proposals in effect to transfer the regulatory functions of the Phone-Paid Services Authority to Ofcom, including associated proposed changes to the regulation of controlled PRS (CPRS). Under these proposals, it plans to withdraw its approval for Code 15 and replace it with its own set of rules in an order that it will make under section 122 of the Communications Act 2003 (draft PRS Order). When the PRS Order comes into force, Ofcom will assume day-to-day responsibility as regulator and enforcer of PRS regulation.

Ofcom fines Shell Energy £1.4m for failing to flag end of contracts

Ofcom has fined Shell Energy £1,400,000 for not properly prompting more than 70,000 phone and broadband customers to review their contract, or letting them know what they could save by signing up to a new deal. Ofcom’s investigation found that the company broke Ofcom rules that require that providers proactively prompt their customers before their existing contract is up and provide important information to help them shop around and take advantage of a better deal. They also require providers to remind their customers if they are already outside of their minimum contract period. Specifically, telecoms and pay-tv companies must issue an “end-of-contract” notification to customers, by text, email or letter, between 10 and 40 days before their minimum contract period comes to an end. They must also send notifications at least annually to customers who are already outside of their minimum contract period, reminding them that they are free to leave or change deal. Both notifications must include “best tariff” information that will help customers understand whether they can save money by changing provider or signing up to a new deal.

Electronic Communications Code (Jurisdiction) (Amendment) Regulations 2023 made

The Electronic Communications Code (Jurisdiction) (Amendment) Regulations (SI 2023/1220) have been made to expand the jurisdiction for determining certain disputes under the Electronic Communications Code to include the First-tier Tribunal in relation to England and Wales for all such disputes. They come into force on 6 April 2024.

Data Protection (Law Enforcement) (Adequacy) (Bailiwick of Jersey) Regulations 2023 made

The Data Protection (Law Enforcement) (Adequacy) (Bailiwick of Jersey) Regulations 2023 (SI 2023/1221) have been made. The Regulations are made to specify the Bailiwick of Jersey as a third country which provides an adequate level of protection of personal data for the purposes of Part 3 (law enforcement processing) of the Data Protection Act 2018 (DPA 2018). These Regulations come into force on 13 December 2023.

EU law

European Parliament committees and EPO issue opinions on draft SEP regulations

Earlier this year, the European Commission proposed a Regulation on SEP licensing. Two European parliament committee gave issued opinions on it. The first, an opinion from the Committee on International Trade, largely disagrees with the wording of the draft Regulation. It commented that the FRAND determination procedure should run in parallel to validity and infringement court proceedings. It recommended that the use of an aggregate royalty mechanism be deleted, saying that such decisions should be made by the courts. It also highlighted the unilateral nature of the potential FRAND determination process, saying that it may be used by a party in bad faith to cause further delays. The second opinion, from the Internal Market and Consumer Protection Committee, supports the regulation, saying that it would help to streamline and improve the licensing of SEPs. It has also said that the regulation should also cover all standardised technology, not just wireless communications. The President of the EPO has written a letter expressing his doubts that the draft SEP regulation will address the issues it identifies. It will be interesting to see how the proposal changes as it goes through the European parliamentary process.