Recent developments and future prospects

Trends and developments

Have there been any notable recent trends or developments concerning the conduct of online and digital business (both business to business and business to consumer) in your jurisdiction, including any regulatory changes or case law?

Mirroring EU trends, the German legislator and courts are increasingly focusing on the legal responsibility and liability of platforms that create the commercial link between businesses and consumers. For example, the legislator has imposed specific regulations on social media and their treatment of user-generated content that substantially infringes third-party rights or the law (eg, the Network Enforcement Act). Case law is shaping when and for which content platforms become primarily liable (eg, as regards third-party marketing content and terms).

Influencer marketing is an area of advertising law that has seen a lot of activity and publicity recently.

Future prospects

What are the future prospects for digital business in your jurisdiction, including any proposed or potential regulatory reforms and future technological/market developments?

The growth of all types of digital business is expected to continue, alongside digital business turnover. Digitised services will increasingly be provided as automated commodities in both business-to-business and business-to-consumer relationships and in all aspects of consumer life. The Internet of Things, financial technologies and insurtech, applications involving reality elements and artificial intelligence and big data-driven services and technologies will not only shape and enhance, but also create digital business offerings.

Legal framework

Legislation

What primary and secondary legislation governs the conduct of digital business in your jurisdiction?

The primary source of sector-specific law is the Telemedia Act, which implements and incorporates the general regulatory framework for e-commerce, including liability rules and information duties (both of which are rooted in the EU e-Commerce Directive (2000/31/EC). Various commercial practices that are vital to marketing activities are governed by the Act on Unfair Commercial Practices. Audiovisual services and platforms will need to refer to the State Treaty on Broadcasting. In addition, a large variety of product and service-specific regulations apply (eg, to the financial services industry, the insurance industry, product distribution and the protection of minors).

Regulatory authorities

Which authorities regulate the conduct of digital business and what is the extent of their powers?

There are no authorities or public administrative bodies specifically endowed with powers to regulate the conduct of digital businesses.

Rather, the authorities that oversee specific sectors are generally allowed to take action against unlawful conduct within their legal remit – most notably media regulation, data protection and telecoms. As a consequence of Germany’s federal structure, providers of online services and operators of digital businesses often also deal with local authorities.

In Germany, markets tend to be regulated from within. This is done through privately organised bodies, such as consumer protection associations and competition protection associations, that have enforcement powers against:

  • breaches of business practice codes (in which case they typically order the infringer to cease and desist); and
  • damages and skimming-off of profits.

This is a matter of civil litigation under the Law on Injunctions for Consumer Rights and Other Infringements and the Act Against Unfair Competition.

Government policy and regulatory approach

How would you describe the government’s policy and regulatory approach to digital business?

 The German government is eager to support market development and growth, while also emphasising the need to protect consumers and ensure that the existing regulatory framework is abided by. Consequently, government activity typically targets areas where the need for improvement with regard to the protection of citizens’ interests has been identified (eg, as was the case with the enactment of the Network Enforcement Act).

Click here to view the full article.