Digital Brief: Reynders leaves the fence, 2022 outlook, France gets big on curbing Big Tech

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“We have not so far identified issues with the Irish data protection rules or have evidence that these rules have not been respected.”

– European Commissioner for Justice Didier Reynders

 

Story of the week: Following the latest spat regarding the Irish data protection authority, the EU Commissioner in charge of the GDPR stepped into the fight by replying to an open letter from four MEPs, pushing back against their call to initiate an infringement procedure against Ireland. Reynders argued that the Irish Data Protection Commissioner (DPC) has recently shown progress in applying the GDPR, has good reasons to be cautious as it deals with complex issues, and cannot be condemned for having a different interpretation of the law. The Belgian politician also criticised the assessment that the DPC only decided on 2% of its cases, a figure based on an Irish Council for Civil Liberties (ICCL) study.

The ICCL rebuttal is that the estimate came from official statistics and accused the Commission of failing to monitor the GDPR’s implementation across the board. Signatory MEP Sophie In’t Veld went one step further and accused the Commission of purposely avoiding clashes with member states in exchange for support with its ‘façade’ legislation, with the GDPR just one example. The Dutch lawmaker followed up on these accusations by sending a request for written answers, questioning whether the EU executive is still playing its role as guardian of the treaties. Read more.

 

Don’t miss: The digital agenda for 2022 is already shaping up to be an extremely busy one. Mammoth legislative packages such as the Digital Markets and Services Acts are approaching the finishing line, or at least that’s the intention of the recently-installed French Presidency. The AI Act is likely to continue its slow progress, as the EU Parliament solved a six-month stalemate with an arrangement that complicates the matter even further. The European data strategy will see its next fundamental step in the Data Act, which already stumbled in a negative internal review in November. Meanwhile, the launch of the European data spaces has been delayed following delays in the Digital Europe Programme. What remains to be seen is to what extent these sectorial data spaces will follow the governance structure defined in the recently approved Data Governance Act. The platform worker directive will start going through its legislative steps while new proposals for a Chips Act and Cyber Resilience Act will be presented later in the year. Read more to know what to expect.

 

Also this week:

  • The French data protection authority issued multi-million euro fines to Facebook and Google for their cookie policies.
  • The German competition authority put Google under ‘special surveillance’.
  • Poland clashed with Facebook over the ban of the page of an extreme-right party.
  • China presented its own set of rules for algorithms.

 

Before we start: As Paris has taken over the rotating presidency of the EU Council, we discuss with our correspondent Mathieu Pollet how France could shape the EU digital agenda in the coming months. Also, how the upcoming presidential elections will influence the French presidency.

France’s digital agenda

As Paris has taken over the rotating presidency of the EU Council, we discuss with our correspondent Mathieu Pollet how France is expected to shape the EU digital agenda in the coming months.

 

Artificial Intelligence

The AI triangle. As anticipated, the amendments presented to the AIDA report go as far as a complete rewrite of the text drafted by conservative lawmaker Axel Voss. Brando Benifei, the IMCO co-rapporteur for the AI Act, did most of the heavy lifting for the S&D group and, in some significant instances, reversed the wording to the exact opposite of Voss’ draft. What is perhaps most interesting is the positioning of Renew in this clash. LIBE co-rapporteur Dragoş Tudorache seems to be interpreting the role of mediator between centre-right and centre-left MEPs, an approach that the AIDA chair is likely to adopt also during the AI Act negotiations.

Meanwhile, in China. Things are moving much faster in the Far East, as the Cyberspace Administration of China (CAC) published new rules on recommendation algorithms this week, set to come into force in March. The regulations contain several limits on what information can be used in algorithms and how they can direct people, particularly children and the elderly, towards certain content and ensure user awareness and access. Also included is a ban on using algorithms to generate or disseminate fake news and the requirement that companies have to respond to user requests for information on how the algorithms work and the dataset used for training them.

Competition

Gatekeeper anticipation. Google will come under extended market abuse control rules following a finding by the German competition authority that it is a platform of “paramount significance across markets”. On Wednesday, the Federal Cartel Office ruled that the restrictions were needed to combat uncompetitive practices by the tech giant. The decision is based on a new Act against Restraints of Competition, which came into force in January and will increase fairness in the digital space and create a digital-market specific competition law. Google is likely to be followed by other Big Tech companies, as these decisions appear to anticipate the gatekeeper designation under the Digital Markets Act (DMA). Read more.

Apple Store, the Dutch way. Apple has until mid-January to implement changes to its App Store payment policies, the Dutch competition watchdog has said. The news comes following an investigation into whether the tech giant’s practices constituted an abuse of its dominant market position, following a specific case on dating apps. The inquiry comes amid much wider international antitrust scrutiny of Apple’s requirement that app developers use its in-app payment system, of which the company takes a commission up to 30%. Read more.

Meta doesn’t agree. Meta will appeal a ruling by the UK Competition and Markets Authority (CMA) that it must sell image platform Giphy because doing otherwise would threaten competition between social media platforms and display advertising. The CMA’s decision marked a significant step in British regulation of Big Tech as this is the first time the watchdog blocked a digital acquisition of this size. Meta argues that the CMA has failed to consider its offer to have Giphy continue providing its services to other platforms such as TikTok and describes the decision as “procedurally flawed”.

Not only Europe. US President Joe Biden is supportive of the slate of bipartisan antitrust bills aimed at reining in Big Tech that are currently making their way through Congress, White House press secretary Jen Psaki said this week. Some bills centred on checking the behaviours and market dominance of the largest tech companies were introduced last year by a group of Democratic and Republican lawmakers. “The President has been very clear in his view that we need more competition in the tech industry; that’s his fundamental view”, said Psaki. “We are encouraged by the bipartisan interest in doing something about this.”

Data & privacy

Expensive cookies. Facebook and Google have been fined €60 million and €150 million respectively by the French competition authority (CNIL) for violating cookie tracking rules. The tech giants were found guilty of not allowing users to easily reject cookies by offering a one-click option to consent to but rather a multiple-click option. This process contravenes CNIL’s fundamental principle that “refusing cookies should be as easy as accepting.” The tech giants will have three months to make their cookie policies compliant or face daily fines of €100,000. Once again, the French privacy watchdog preferred to use the ePrivacy Directive to issue the sanctions, avoiding the lengthy GDPR procedure for cross-border cases. Read more.

WhatsApp fights back. The details of WhatsApp Ireland’s appeal against a 2021 decision by the European Data Protection Board (EDPB) were published this week. Last year, the EDPB handed the messaging service a record fine of €225 million over transparency, anonymisation, and personal data processing issues. WhatsApp Ireland has appealed to the EU Court of Justice. Among its arguments are the assertions that the EDPB exceeded its competence under the GDPR in issuing the decision, that the watchdog violated the EU Charter of Fundamental Rights’ presumption of innocence, and that the EDPB itself violated the GDPR by obliging WhatsApp to provide unnecessary information under an overly broad definition of “personal data”.

Digital Services Act

Testing the ground. This week saw a major clash between the Polish government and Facebook as the social network banned the page of the extreme-right wing party Confederation. Facebook motivated its decision saying the page repeatedly violated its terms and conditions, notably spreading disinformation around COVID-19, and hate speech. However, the ruling party Law and Justice, which competes for a similar electorate, did not react well to the move, accusing the platform of unduly meddling in a country’s political affairs in a way not compatible with democratic principles.

What about the DSA. The DSA is meant to provide clear rules for content moderation, mainly providing mechanisms for dealing with complaints (Art. 17) and out-of-court dispute settlement (Art, 18). At the same time, the Polish episode is likely to influence the discussion around the restoring of legal content, provisions strongly wanted by Warsaw that do not include the reinstatement of an account. The restoration of content in Poland would be up to the Council for Freedom of Speech, a new body the government intends to set up to oversee the validity of content moderation decisions. Lidia Dutkiewicz and Aleksandra Kuczerawy, two researchers at KU Leuven, warn that “as we’ve already seen a heated discussion on the so-called ‘media exemptions’, we might expect an additional push from some politicians to introduce a form of ‘must carry’ rules for platforms for certain types of content (e.g. speech by heads of states, politicians).”

Industrial strategy

Quantum R&I. The French government has launched a new programme linking quantum machines and supercomputers to ensure France can keep pace with future technological revolutions. The move is led by a partnership between the government’s digital minister and minister for the armed forces. It will aim to make quantum technology widely accessible, including to the scientific community and start-ups across France and the EU. Read more.

Media

Newly born. On 1 January, France created a new regulatory body: Arcom. Born from the merger of the French audio-visual watchdog and an anti-piracy body, Arcom’s scope of competence has been extended to include players in the digital sector, particularly subscription video-on-demand services like Netflix and online platforms in the fight against information manipulation and online hate. In the coming months of the election period, it will be responsible for enforcing the rules governing the speaking time of candidates and their supporters on the audio-visual media. Arcom will also have the delicate task of giving its opinion on the proposed merger between the two major French television channels, TF1 and M6.

Not a continent for whistle-blowers. Almost all EU countries failed to transpose the Whistle-blower Directive into national law by the 17 December deadline. The law, adopted in 2019, is intended to strengthen and standardise protection for those who report breaches of EU law. However, 24 of the EU’s 27 member states were still transposing the legislation into national law as the deadline passed, and three countries had yet to initiate the process. Read more.

Euronews changes hands. Alpac Capital, a Portuguese venture capital firm, has acquired an 88% stake in Euronews and aims to scale the pan-European broadcaster up as it recovers from a financially difficult few years. Controversy has followed the announcement of the takeover, however, as personal and professional links between the father of Alpac’s CEO  and Hungarian Prime Minister Viktor Orbán, who in 2021 became the first European leader to feature on Reporters Without Borders’ “Press Freedom Predators” list. Read more.

And then there were none. Stand News, a Hong Kong pro-democracy media outlet, announced last week that it would be shutting down following a police raid and the arrests of seven of its current and former staff amid an ongoing crackdown on independent media in the city. The outlet announced the immediate cessation of its operations after police stormed its offices, seized materials, and arrested staff members or placed them on wanted lists. As with the shutdown of outlet Apple Daily last June, the raid has heightened concerns over press freedom violations in Hong Kong under Beijing’s controversial national security law. Read more.

Vetoed media law. Poland’s President of the Republic has vetoed a media ownership bill that caused extended controversy and had drawn criticism from several countries. Dubbed “Lex TVN”, the law would have denied broadcast licenses to companies based outside the EEA, widely seen as a way of targeting news channel TVN24, owned by US company Discovery Inc. and frequently critical of the government. President Andrzej Duda announced last week that the bill would not proceed, following international criticism and domestic protest. Read more.

Nothing to see here. According to data from the International Federation of Journalists, the number of journalists killed in Europe tripled in 2021, with six murders recorded throughout the year. Ninety-five journalists were recorded as imprisoned in Europe. Physical violence towards media workers is also rising: the Council of Europe recorded 242 severe violations of press freedom in 2021, 74 of which involved attacks on journalists’ physical safety and integrity.

Platforms

Leave.? Tens of thousands of .eu internet domain names belonging to owners based in the UK have been taken offline as part of the country’s departure from the EU. Those shut down this week had been suspended since the end of the Brexit transition period at the end of 2020; owners will now have to prove their EU residency or citizenship to re-register their domains. Among those whose registration has now been revoked is Leave.eu, the online home of the pro-Brexit campaign.

Touching the sky. Monday saw a milestone moment for Apple, which became the first company to reach a stock market value of $3 trillion as shares hit a record high. For comparison, that is larger than the GDP of France, the second-largest EU economy. That pride of place was short-lived, however, as the tech giant, already the world’s most valuable company, slipped back down again to a valuation of $2.99 trillion before 2022’s first day of trading was done. Still, such a minor setback does not overshadow that the company tripled its market value in less than four years, probably thanks to the pandemic-driven rising demand for electronic devices.

 

On our radar: Expect the legislative pace to return to full speed next week, as several important appointments are on the agenda. On Monday, the IMCO committee is due to hold the first discussion on the regulation of political advertising. The first DMA trilogue is scheduled to take place on Tuesday. Wednesday will see the deadline for tabling amendments ahead of the plenary vote that will take place the week after next, with some last attempts for a media exemption and a ban on targeted ads to be expected. The co-legislators will meet again on Thursday for the first trilogue on the NIS2 Directive.

 

What else we’re reading this week:

Investors gear up for ‘gold rush’ in metaverse hardware (FT)

Why Six Countries Heavily Invest in Quantum Computing for Artificial Super Intelligence (Medium)

[Edited by Alice Taylor]

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