On 25 May 2016, the European Commission published a “Commission Staff Working Document” together with its “Communication on Online Platforms and the Digital Single Market: Opportunities and Challenges for Europe ” (see here our previous post on this Communication).
The starting point of the Staff Working Document is that online platforms cover a wide range of activities, but share several common features:
(i) the capacity to facilitate and extract value from direct interactions or transactions between users;
(ii) the ability to collect, use and process personal and non-personal data in order to optimise, inter alia, the service and experience of each user;
(iii) the capacity to build networks where any additional user will enhance the experience of all existing users;
(iv) the ability to create and shape new markets into more efficient arrangements that bring benefits to users but may also disrupt traditional ones; and
(v) the reliance on information technology as the means to achieve all of the above.
The Staff Working Document distinguishes five different business models of online platforms, which we summarise below.
Welcome to the Hogan Lovells Global Payments Newsletter. In this monthly publication we provide an overview of the most recent payments, regulatory and market developments from major jurisdictions around the world as well as sharing interesting reports and surveys on issues affecting the market.
Key developments of interest over the last month include:
- Round Two: With phase 2 of the implementation of the IFR on 9 June the UK Payment Systems Regulator has published draft guidance setting out some key areas of interpretation.
- The rise of contactless: Multiple reports cite the increased use of contactless payments, with this payment method now accounting for 10% of all card transactions in the UK.
- Pay for your pizza using Pepper: MasterCard’s humanoid robot Pepper can now accept digital payments and will be introduced in Pizza Huts across Asia in late 2016.
- Blockchain could save billions: A Goldman Sachs report claims the use of blockchain could save the cash equities market US$6bn through reducing headcount and IT costs.
To view a PDF of the full Newsletter please click here. You can also follow us on Twitter at @HLPayments for regular news and updates.
In a major victory for the Federal Communications Commission’s democratic majority, the U.S. Court of Appeals for the D.C. Circuit upheld the FCC’s 2015 Open Internet Order on June 14, 2016. The 2-1 decision by the D.C. Circuit Court of Appeals likely is not the last word on net neutrality because broadband service providers will very likely pursue rehearing from the full D.C. Circuit court or the Supreme Court. The ruling has also renewed calls for congressional action on net neutrality. For now, the court’s decision paves the way for the Commission to take additional actions to regulate broadband, such as adopting privacy rules for broadband providers.
In the 2015 Open Internet Order that the D.C. Circuit Court of Appeals reviewed, the FCC reclassified broadband Internet access service as a telecommunications service, subject to common carrier regulation under Title II of the Communications Act. The FCC imposed three “bright-line” rules: (1) no blocking, (2) no throttling, and (3) no paid prioritization. The FCC also imposed a forward-looking “general conduct” standard that prohibits broadband providers from “unreasonably interfer[ing] with or unreasonably disadvantag[ing] (i) end users’ ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of their choice, or (ii) edge providers’ ability to make lawful content, applications, services, or devices available to end users.’” Finally, the FCC enhanced the disclosure and transparency requirements that apply to service providers.
The Beijing No.1 Intermediate People’s Court recently refused to recognise that there is a “right to be forgotten” under Chinese laws. However, the fact that this issue was expressly raised and discussed in the Chinese court highlights that litigants and courts in China have kept themselves apprised of data privacy developments elsewhere in the world. And while recognising that this “right to be forgotten” is not expressly provided for under Chinese laws, the Chinese court seemed to have left open the possibility of offering some kind of protection if the circumstances justify it. This is a rapidly changing area and we may see more judicial discussion on this issue in the future.
The facts are relatively simple. In a nutshell, the claimant (a teacher) filed this lawsuit to request a major Chinese search engine to remove autocomplete search words showing or suggesting that he was previously employed by a particular education service company (his former employer). He complained that his former employer had a bad reputation and the availability of these search words had caused damage to his name and reputation. He asked for the information “to be forgotten”.
What’s the deal?
The Regulation will have a significant impact on service providers/vendors (i.e. data “processors”) and organisations that engage them because:
- The Regulation imposes a number of detailed obligations and restrictions directly on processors, unlike the current Directive that only applies to data controllers
- A processor will be fully liable for the actions of any sub-processor that it uses to provide its services and will be required to flow down its obligations under the Regulation to the sub-processor
- There are significant penalties which can be imposed on processors for failure to comply with their increased responsibilities and individuals have enhanced rights to seek compensahotion directly from service providers
- The new law is much more prescriptive about the contractual arrangements that must be in place between controllers and processors than under the current Directive
- The new rules are considered in further detail below and will be triggered where:
- The processor is established in the EU (even if the actual processing takes place outside the EU)
- Where the processor offers goods or services or monitors the behaviour of EU-based individuals (even if the processor is not established in the EU). In such circumstances the non-EU based processor must designate an EU representative, unless the data processing is occasional, does not involve sensitive data processing or is not high risk to the individual
On 31 May 2016, the European Court of Justice (CJEU) handed down a long awaited decision regarding the interpretation of the term “communication to the public” (Case Ref. C-117/15). Over recent years, the interpretation of this term has been heavily under discussion. It was subject-matter of various lawsuits in many Member States as well as before the CJEU (e.g. judgment of 13 March 2014, Case Ref. C-466/12 – Svensson, or judgment of 15 March 2012, Case Ref. C‑135/10 – SCF ./. Del Corso). With the current ruling, the judges in Luxembourg have taken the opportunity of clarifying at least some of the aspects that were in dispute.
The current questions regarding the interpretation of the term “communication to the public” were initially submitted by the Regional Court of Cologne in February 2015. The German court was and still is sitting over an action brought by the collecting society GEMA (German society for musical performing and mechanical reproduction). The defendant is a German rehabilitation center which placed several TVs in its waiting and training rooms. Patients who were waiting for their treatment or performing their rehabilitation training could watch the broadcasted program. GEMA considered placement of the TVs as an act of “communication to the public” with the consequence that a fair remuneration was requested from the rehab center. The rehab center, however, refused to pay any copyright levies to GEMA. Consequently, the matter went to court.
At first instance, the Local Court of Cologne ruled in favor of GEMA. However, on appeal the Regional court of Cologne expressed over affirming the first instance judgment or not (see blog post, 11 June 2015). The court did so on the back of jurisprudence which is not always consistent in this field of law. For instance, the CJEU once denied “communication to the public” in the case of SCF ./. Del Corso when radio broadcasting in dental practices was at stake (Judgment of 15h March 2012, Case Ref. C-135/10). Thus, the judges in Cologne did not feel sure about how to deal with TVs in a rehab center and referred a number of questions to the CJEU.
After the Advocate General published his opinion at the end of February 2016, it was now up to the CJEU to decide on the matter.
On 25th of May the European Commission published the draft for the amended Audiovisual Media Services Directive (AVMS Directive), which regulates broadcasting and on-demand audiovisual media services in Europe. The Commission’s draft extends the scope of audiovisual regulation to cover new online services.
Regulation of internet video channels
Currently the AVMS Directive only covers content that is comparable “to the form and content of television broadcasting” due to the definition of “programme” in the Directive. In the draft for the amended AVMS Directive this passage has been deleted while simultaneously “videos of short duration” have been added to the examples for programmes under the Directive.
This might lead to a considerable extension of the Directive’s scope. Currently the main test is whether video content is “TV-like“. The new test would expand this to cover any video content that is (i) organized in catalogues or channels, (ii) under editorial responsibility, (iii) in a service normally provided for remuneration; (iv) by a provider established inside the EU.
How these conditions will be interpreted when the Directive is implemented, remains to be seen.
Hogan Lovells’ partner Winston Maxwell was appointed as one of the nine outside experts for a think tank called “CSA Lab” which has been launched by France’s audiovisual regulator, the Conseil Supérieur de l’Audiovisuel (CSA). The CSA lab will provide forward-looking insight on how audiovisual regulations should evolve in light of digital transformations of audiovisual creation and distribution. The CSA lab consists of two commissioners from the CSA board, and nine outside experts. Winston will participate in a working group focusing on how regulatory definitions should evolve in light of digital transformations. This work is closely linked to the current discussions on reform of the European Audiovisual Media Services (AVMS) Directive. During the June 14, 2016 press conference announcing the launch of the CSA lab, Winston commented on the United States approach to regulation of the Internet, pointing out that the United States Supreme Court had decided in 1997 that broadcasting-style regulations could not be applied to the Internet without violating the First Amendment of the US Constitution.
“The Supreme Court found that broadcasting regulations draw their legitimacy in large part from the scarcity of frequencies used for broadcasting. When that scarcity disappears, the legitimacy of special broadcasting regulations diminishes.”
Winston’s views on broadcasting regulation and the Internet are reflected in the 2014 paper that he wrote at the request of the French Conseil d’Etat on how US courts apply freedom of speech principles to regulation of the Internet.
Chances are, at some point you’ve heard of the blockchain, or perhaps at least Bitcoin. It’s an increasingly hot topic as more and more attention is being paid to digital currency. The blockchain is what makes Bitcoin, and other similar transactions involving digital currencies, viable. Simply put, a blockchain is a time-stamped and linked shared digital ledger of transactions, accessible publicly or by a defined group. As transactions get executed, they get aggregated into “blocks”, and each completed block is added to a linear chain in chronological order. This article provides a good primer on blockchain.
Very recently, I had the pleasure of moderating an engaging symposium on the future of blockchain, hosted at Hogan Lovells’ New York office.
Organized by the Structured Finance Industry Group (SFIG), the panel brought together some of the key players in the industry, including Caitlin Long, advisor at Symbiont – a tech company bridging the gap between Wall Street and the blockchain, Andrea Tinianow, Global Delaware Director and lead for the Delaware Blockchain Initiative, K. Waterman, Managing Partner and Chief Technology Officer at Ranieri Strategies – a collection of investment and asset management companies focused on financial services and technology, and Marco Santori, Partner at Pillsbury Winthrop and State’s legal advisor on the Delaware Blockchain Initiative.