On 19 February 2020, the European Commission revealed the first pillars of its strategic and policy objectives in the digital space over the next five years in (i) a communication on shaping Europe’s digital future, (ii) a communication on a European strategy for data, and (iii) a white paper on Artificial Intelligence.
Under the umbrella of the Commission’s overarching goal to improve Europe’s “economic competitiveness” and foster an “open, fair, diverse, democratic, and confident” digital economy (highlighted in its press release), the underlying documentation reveals a detailed roadmap of numerous (legislative) initiatives that will have far-reaching implications, in particular for Big Tech and data-driven companies. Interested parties should therefore speak up by participating in the public consultation.
Shaping Europe’s digital future
“Fairness” is one of the most prominent and recurring themes in the Commission’s broader policy objectives in the ‘digital economy’.
In this context, the Commission specifically intends to address concerns relating to the "gatekeeper function”, “systemic role”, and “market power” of certain online platforms by introducing an ex ante regulatory framework (expected in Q4 2020). Given the lack of detail, however, the Commission’s proposal raises numerous questions. Among other things, the Commission fails to provide insight into (i) the legal basis and applicability criteria for such an instrument, (ii) which measures it would consider appropriate to impose on platforms to remedy the (yet to be defined) market failure, and (iii) the necessity and proportionality of additional regulation in view of the P2B Regulation (see our newsletter of August 2019) and the enforcement of EU competition law in the digital sector.
Another key priority of the Commission is to explore measures to address unfair tax advantages of large tech companies, building on progress made in the context of the OECD (see e.g. OECD consultation document of March 2019).
The Commission will also launch a sector inquiry in 2020 to investigate other potential market distortions or restrictions in digital markets. Note that sector inquiries conducted by the Commission in the past, for example into energy markets in 2007 and the pharmaceutical sector in 2009, triggered specific investigations into competition law violations.
European strategy for data
The Commission’s “data strategy” focusses on (i) increasing the accessibility, availability and interoperability of data, (ii) investing in European data infrastructure and data literacy, and (iii) ensuring users’ ability to control their (personal) data.
In particular, the Commission intends to introduce a regulatory framework to stimulate the development of data pools (“European data spaces”) by allowing large-scale data exchanges between public bodies, businesses and research centers in certain key industries (e.g. mobility, health, financial and manufacturing services). According to the Commission, facilitating pan-European data pooling, accompanied with data interoperability standards and access requirements, will foster data-driven innovation by European businesses.
Although the Commission predominantly stresses the importance of ‘opening up’ access to high-value public datasets in this context, it also clearly intends to adopt measures to regulate the exchange of data between businesses, among other things, to “correct imbalances in market power”. In certain cases, the Commission considers making access to data “compulsory, where appropriate under fair, transparent, reasonable, proportionate and/or nondiscriminatory conditions”. The Commission does appear to acknowledge, however, that obligatory data access requirements are only justified in case of clear market failures, “which competition law cannot solve”.
White paper on Artificial Intelligence
The Commission’s white paper on artificial intelligence reflects its first concrete step to introduce legislation in the digital sector.
The white paper reveals the Commission’s intention to impose strict legal requirements on the use of AI in “high-risk” sectors, such as energy, transportation, healthcare, and government. In such cases, the Commission essentially requires companies to only implement AI if it is ‘explainable’.
In particular, the Commission would require companies in high-risk sectors to only apply AI applications to the extent that the underlying training data is unbiased and representative, record keeping and information underlying the system is adequate and verifiable, the system is technically robust and accurate, and the AI system’s results can be verified by humans.
The Commission’s white paper, however, fails to address numerous fundamental issues, such as the specific criteria to distinguish high-risk use of AI from low risk applications, and the risk of prohibiting AI use that objectively results in better outcomes (despite being ‘unexplainable’).
Considering the potentially far-reaching implications of the Commission’s policy objectives in the digital sphere, we would strongly advise interested parties to participate in the Commission’s public consultation (open until 19 May 2020).
In addition to the new legislative measures in the digital economy, the Commission will also review and adopt coinciding amendments to its competition law guidelines to clarify the conditions under which vertical and horizontal agreements between companies – e.g. on data sharing and access – will be considered compliant, as well as other updates to existing data protection and sector-specific legislation.
This article was published in the Competition Newsletter of March 2020.