Articles by Conan D'Arcy on the GC Blog and GC analysis
The initial promise of the internet age was for a free and open space to exchange information. However the advent of algorithm-driven content raises important questions about what we see, how much we share a common information landscape and the reliability of what we rely on for news.
The Global Counsel TMT and financial services teams served as the rapporteurs for the 2018 UK Finance Cyber Resilience Leaders’ Summit, held at Wilton Park on 8-9 October 2018. With cybersecurity now second only to political risk as one of the key challenges facing the UK financial sector, this two day gathering of the industry’s leading practitioners under the auspices of its chief industry association set a new course for the sector in strengthening its defences against cyberattack and building an open dialogue with regulators and the public about the risks. The Wilton Park report was authored by a team led by GC TMT practice lead Conan Darcy for UK Finance.
All eyes in the tech community in Europe and beyond are fixed on 25th May 2018 when the EU’s General Data Protection Agreement (GDPR) finally enters into force. But many are misunderstanding what is driving the agenda here - focusing on the apparent loathing of big tech in Brussels when, in truth, the European Commission is driven more by fear of failure.
In the late 1990s and early 2000s, the EU and the US legislated for an online ‘liability exemption’ under which websites and online platforms are broadly not held liable for the content or products that their customers and users upload to their sites. This approach was replicated globally and has been key in allowing user-generated and user-uploaded platforms such as YouTube, eBay and Twitter to grow, flourish and consolidate. It has also been criticised by more traditional media that do not enjoy the same immunity.
UK government proposals on cybersecurity in the automotive sector highlight how one unexpected outcome of digitisation could be the introduction of strict corporate governance rules previously unseen outside of the financial services sector.
After an eight-month hiatus, the EU looks finally set to have a new Commissioner in charge of its flagship, the Digital Single Market (DSM) agenda. Mariya Gabriel is a former MEP, and it showed, in an effective hearing before the European Parliament, which is now certain to rubber stamp her appointment. This support matters for Gabriel as she will need to mobilise MEPs to publicly back her agenda, particularly on issues where member states in the Council are proving intractable. Gabriel acknowledged that she had two years remaining in the post, and, rather than proposing a slew of additional reforms, her primary responsibility will be in cajoling MEPs and member states into finalising proposals that are already on the table. Her main task will be implementation rather than policy formulation.
A vote today in the European Parliament’s Culture Committee on the reform of the Audio-Visual Media Services (AVMS) Directive signals a significant re-nationalisation of the EU’s single market in online broadcasting.
In the 2016 Presidential election, Silicon Valley burnished its credentials as a liberal bastion. In the combined counties of San Francisco, San Mateo, Santa Clara and Alameda, 78% of voters supported Hillary Clinton with only 16% voting for Donald Trump.
The European Commission today brought charges against Facebook, alleging the company misled the EU’s competition authorities during its acquisition of WhatsApp in 2014. The social media giant stands accused of submitting evidence to the Commission to the effect that it was technically impossible to match its users’ accounts with WhatsApp’s, something subsequently shown not to be the case when the companies announced in August this year that their accounts would be matched.
"I am tackling the longstanding problem of our fastest growing technology firms being snapped up". So said UK Chancellor Philip Hammond this week. Yet the very next day it was announced that Skyscanner, one of the UK’s leading tech companies, had been “snapped up” up by Ctrip.com, the Chinese online travel company for £1.4 billion. Should we see this as an example of the kind of problem Hammond thinks he needs to solve? If so, what might he do?
Ed Vaizey made a splash at Global Counsel’s breakfast “Digital Tech: Bridge or Barrier to Social Mobility?” when he suggested that self-employed platform workers should receive the minimum wage. The former Minister of Culture and the Digital Economy was responding to a succession of controversies over working conditions in the so-called “gig economy”: Deliveroo riders have protested changes in their remuneration structure; the courier service Hermes is potentially facing an investigation from HMRC; and an employment tribunal ruling against Uber could fundamentally transform their self-employed business model.
As Whitehall limbers up for the UK’s exit negotiations from the European Union by establishing new departments and recruiting new staff, it will be some time before the government reaches its full capacity for managing the negotiations. Before this point, however, fundamental decisions will need to be taken about the direction of the negotiations, such as whether to continue participating in the EU’s single market and the likely direction of the UK’s new immigration policy. In this period, economic sectors face a competition for advocacy to influence the limited capacity of Whitehall. Much of the focus has so far been on the sectors perceived to be most exposed to exiting the EU such as banks and automotives. As delegates meet tomorrow for the Royal Television Society conference, the interests of the audio-visual sector will be at the fore.
The data security world has been rocked by Yahoo’s revelation that it had been the victim of a “state sponsored” hack leading to the exposure of 500 million user accounts. Beyond the sheer scale of the breach, its significance lies in the apparent lack of transparency with users, who were only notified this week when the incident is reported to have occurred in 2014. This opacity does not appear limited to Yahoo’s customers since even Verizon, which is acquiring Yahoo for $4.8 billion, has issued a public statement clarifying that it had only received “limited information and understanding of the impact”.
Yesterday brought a remarkable turn-around in the fortunes of Hutchison and its plans to acquire greater market share in Europe’s mobile markets, only months after its acquisition of Telefonica’s O2 had been rejected. The European Commission announced that it had approved a joint venture between WIND and H3G in Italy, owned respectively by Vimpelcom and Hutchison, two of the country’s four major mobile operators.
The Digital Single Market strategy was launched with great fanfare last year with the aim of creating an online consumer market of over 500 million people and to give encouragement to the growth of European digital companies large enough to compete with the Googles and the Alibabas. The implicit trade-off in this agenda was that the interests of cross-border consumers and companies should be prioritised over businesses using national, more traditional business models. Developments this week suggest that this trade-off is no longer at the heart of the EU approach.
The EU’s Competition Commissioner Magrethe Vestager announced yesterday she had blocked the proposed merger of Hutchison’s Three and Telefonica’s O2 in the UK. This marks a clear departure from the policy of her predecessor, Joaquin Almunia, who had approved a series of mergers which reduced the number of mobile competitors in national markets from four to three. In contrast, Vestager asserted that only having three mobile competitors in the British market would have had a negative impact both on investment in mast infrastructure and on retail prices for British consumers.
Today’s budget included a tax break for self-employed workers. The government’s approach is a rare example in Europe of promotion of the self-employment model, though the prospect of a comprehensive strategy remain remote while the government pursues its deficit elimination strategy.
The collapse of the proposed merger between Telenor and Teliasonera and the launch of antitrust proceedings against Sky and six Hollywood companies have highlighted DG Competition’s ambition and prominence in the EU’s ‘Digital Single Market’ (DSM). Its prioritisation of market competition and consumer interest is an important choice when set against the commercial interests of established industries and their arguments about consolidation and investment. Upcoming mobile telecoms merger cases in Italy and the UK will further test Commissioner Vestager’s resolve and the outcome will send an important signal to the market of whether competition will continue to be given precedence over national consolidation in the DSM.