On 19 February 2020, the European Commission (the “Commission”) published three policy papers as part of its strategy to “shape Europe’s digital future”: a white paper on artificial intelligence (AI) (the “AI White Paper”), a communication on a European strategy for data (the “Data Strategy Communication”), and a communication on shaping Europe’s digital future (the “Digital Future Communication”).
The proposals and initiatives contained in these papers represent the first major announcement by the new Commission in relation to “a Europe fit for a digital age”, one of the six primary ambitions set out in President von der Leyen’s political guidelines for 2019-2024. The announcement also represents the Commission’s first major regulatory proposal in this area since Margrethe Vestager commenced her dual-role as Executive Vice-President of the Commission responsible for “a Europe fit for a digital age” and Commissioner for Competition. From a competition law perspective, the Data Strategy and Digital Future Communications contain proposals relating to: ex ante regulation of “Big Tech” platforms; potentially updating competition law as it applies to digital markets; how the collection and use of data can be factored into in merger control analyses; and voluntary and (where appropriate) compulsory data sharing. The scope of the papers seems to be ambitious, and it remains to be seen how many of the proposals and ideas will ultimately be taken forward in the short to medium term.
AI White Paper
The AI White Paper sets out the Commission’s proposed approach to AI regulation. The focus is on a risk-based approach, imposing mandatory regulatory requirements for “high-risk” applications, i.e. where the AI is deployed in a sector where significant risks can be expected (e.g. healthcare) and where risks are likely to arise given the manner of use of the AI (e.g. health risks). For high risk (and certain other) applications, the AI White Paper proposes requirements in relation to: training data; data and record-keeping; information to be provided; robustness and accuracy; human oversight; and specific requirements for certain particular AI applications, such as those used for purposes of remote biometric identification. For non-high risk AI applications, the AI White Paper proposes a voluntary labelling scheme, through which economic operators that opt-in would be awarded a “quality label” for their AI applications.
The AI White Paper also sets out proposals in relation to compliance, enforcement and governance with respect to the new regulatory framework, including in particular the use of prior conformity assessments (which is already in place for many products placed on the EU internal market), with procedures for testing, inspection or certification as adapted to AI applications, including potentially checks of the algorithms and of the data sets used in development phases. Finally, the AI White Paper raises possible adjustments to EU product safety and liability legislation and potentially new legislation specifically for AI, in order to make the EU legal framework fit for current and anticipated technological and commercial developments (this is further explored in a separate report accompanying the AI White Paper).
The AI White Paper will be open to consultation until 19 May 2020 (the consultation will be made available here).
Data Strategy Communication
The Data Strategy Communication sets out a number of initiatives that are essentially intended to promote the EU’s data economy. Amongst other things, the Data Strategy Communication proposes possible legislative initiatives (as part of a “Data Act”) to promote business-to-business data sharing on a voluntary basis. As part of this, the Commission will provide guidance with respect to the compliance of data sharing and pooling arrangements with EU competition law. The Commission will also consider making data-sharing compulsory in specific circumstances under “fair, transparent, reasonable, proportionate and/or non-discriminatory conditions.”
The Data Strategy Communication discusses “Big Tech” companies accumulating large amounts of data, which can result in competitive advantages that affect the contestability of markets and enable those firms to spread into neighbouring markets relatively easily. However, this issue does not form part of the “Data Act” – instead it will be examined under the proposals/initiatives in the Digital Future Communication (see below).
In relation to merger control, the Data Strategy Communication states that the Commission will look at the possible effects on competition of large-scale data accumulation through acquisitions and at the utility of data-access or data-sharing remedies to resolve any concerns. With respect to state aid, the Data Strategy Communication states that the Commission will examine, in its ongoing review of a number of state aid guidelines, “the relationship between public support to undertakings (e.g. for digital transformation) and the minimisation of competition distortions through data-sharing requirements for beneficiaries.”
Other proposals include:
- an implementing act defining the public sector “high-value data sets” under the revised Open Data Directive on public sector information re-use, for which greater access rights apply;
- possible legislative initiatives addressing issues related to usage rights for co-generated data (such as internet of things data in industrial settings), and establishing data pools for data analysis and machine learning; and
- the establishment of “common European data spaces” in strategic sectors and domains of public interest, with the aim of creating large pools of available data in these sectors combined with the technical tools and infrastructures necessary to use and exchange data, as well as appropriate governance mechanisms. The sectors listed are: industrial, the “European green deal” area, mobility, health, financial, energy, agriculture, public administration and skills.
The Commission is currently gathering feedback on its data strategy (no deadline appears to have been set).
Digital Future Communication
The Digital Future Communication sets out three key principles/objectives: (1) “technology that works for people”, (2) “a fair and competitive economy”, and (3) “an open, democratic and sustainable society”. The communication contains an array of proposals to promote these principles/objectives, but is largely light on detail in relation to specific proposals. In relation to the second objective, the Commission emphasises the need to ensure a level playing field for businesses in the EU single market. As part of this initiative, the Commission will:
- launch a sector inquiry into digital markets in 2020;
- evaluate/review the fitness of EU competition rules for the digital age on an ongoing basis (provisionally until 2023). The Commission is already reviewing rules governing horizontal and vertical agreements and market definition;
- explore the possibility of introducing ex ante regulation to ensure that “markets characterised by large platforms with significant network effects acting as gate-keepers, remain fair and contestable for innovators, businesses, and new market entrants.”; and
- look to address the tax challenges arising from digitisation of the economy.
The other two objectives are less related to competition policy. Examples of proposals relating to the first objective include promoting investments in Europe’s Gigabit connectivity, rolling out 5G corridors for connected and automated mobility, boosting digital literacy and skills, and improving the labour conditions of platform workers, while examples relating to the third objective include harmonising the responsibilities of online platforms in respect of the content they host, revising the eIDAS Regulation on electronic identification and trust services for electronic transactions, and addressing the threats of external intervention in European elections, amongst other things.
One of the Commission’s primary aims (in particular in relation to the Data Strategy and Digital Future Communications) is maintaining a level playing field for small-to-medium sized European businesses in terms of access to both consumers and data in the digital age. In this sense, the Commission appears to be suggesting a two-pronged attack to promote a level-playing field.
Firstly, mandatory data-sharing obligations could seek to ensure that small businesses have access to the same data as larger incumbents (in the same vein as the Commission’s ongoing investigation into Amazon, where the Commission alleges that Amazon abuses its market position by collecting merchants’ sales data and exploiting it to its own advantage). Secondly, we could also see ex ante regulation regarding the treatment by digital platforms of businesses that distribute their products/services through them. These proposals in particular seem to be aimed at “Big Tech”, which is generally taken to mean Google, Apple, Facebook, Amazon and sometimes also Microsoft (although a wider application cannot be ruled out). Such regulatory intervention could supplant the current competition law regime as it applies in this area, avoiding the need for drawn-out and complex antitrust investigations (such as the concluded investigations – pending on appeal – in Google Shopping and Google Android and the ongoing investigation into Amazon’s data practices).
More than anything else, however, the papers act as a roadmap for future regulatory initiatives in the digital sector, and in particular in relation to AI and data. The scope of the papers seems to be ambitious, and it remains to be seen how many of the proposals and ideas will ultimately be taken forward in the short to medium term. More detail on the proposals that are taken forward should become available later in 2020.