Calls for a creation of a “Digital Authority”, increased onus to police user generated content and reducing market concentration

The United Kingdom Select Committee on Communications has released a very interesting report on the regulation of the internet. Entitled Regulating in a Digital World, the report calls for a whole new era and methodology for regulating both online service providers and platforms, and the content that is made available through them. It calls for regulation based upon ten principles enunciated in the introduction:

1. Parity: the same level of protection must be provided online as offline
2. Accountability: processes must be in place to ensure individuals and organisations are held to account for their actions and policies
3. Transparency: powerful businesses and organisations operating in the digital world must be open to scrutiny
4. Openness: the internet must remain open to innovation and competition
5. Privacy: to protect the privacy of individuals
6. Ethical design: services must act in the interests of users and society
7. Recognition of childhood: to protect the most vulnerable users of the internet
8. Respect for human rights and equality: to safeguard the freedoms of expression and information online
9. Education and awareness-raising: to enable people to navigate the digital world safely
10. Democratic accountability, proportionality and evidence-based approach.

At its heart, the Report calls for the creation of what's called a Digital Authority that would advise government and regulators about the online environment: 

238. We recommend that a new body, which we call the Digital Authority, should be established to co-ordinate regulators in the digital world. We recommend that the Digital Authority should have the following functions:

• to continually assess regulation in the digital world and make recommendations on where additional powers are necessary to fill gaps;
• to establish an internal centre of expertise on digital trends which helps to scan the horizon for emerging risks and gaps in regulation;
• to help regulators to implement the law effectively and in the public interest, in line with the 10 principles set out in this report;
• to inform Parliament, the Government and public bodies of technological developments;
• to provide a pool of expert investigators to be consulted by regulators for specific investigations;
• to survey the public to identify how their attitudes to technology change over time, and to ensure that the concerns of the public are taken into account by regulators and policy-makers;
• to raise awareness of issues connected to the digital world among the public;
• to engage with the tech sector;
• to ensure that human rights and children’s rights are upheld in the digital world;
• to liaise with European and international bodies responsible for internet regulation.

239. Policy-makers across different sectors have not responded adequately to changes in the digital world. The Digital Authority should be empowered to instruct regulators to address specific problems or areas. In cases where this is not possible because problems are not within the remit of any regulator, the Digital Authority should advise the Government and Parliament that new or strengthened legal powers are needed.

The Report further critiques the presence of large companies that it says dominate the digital space, and calls for greater regulation and scrutiny of mergers and challenges the paradigm of cross-subsidies that result in free services:

15. Mergers and acquisitions should not allow large companies to become data monopolies. We recommend that in its review of competition law in the context of digital markets the Government should consider implementing a public-interest test for data-driven mergers and acquisitions. The public-interest standard would be the management, in the public interest and through competition law, of the accumulation of data. If necessary, the Competition and Markets Authority (CMA) could therefore intervene as it currently does in cases relevant to media plurality or national security. 

16. The modern internet is characterised by the concentration of market power in a small number of companies which operate online platforms. These services have been very popular and networks effects have helped them to become dominant. Yet the nature of digital markets challenges traditional competition law. The meticulous ex post analyses that competition regulators use struggle to keep pace with the digital economy. The ability of platforms to cross-subsidise their products and services across markets to deliver them free or discounted to users challenges traditional understanding of the consumer welfare standard. 

With respect to problematic content, the Report proposes the removal of safe harbours that current protect platform providers and replacing it with an obligation to police and be accountable for that user generated content: “a duty of care should be imposed on online services which host and curate content which can openly be uploaded and accessed by the public. This would aim to create a culture of risk management at all stages of the design and delivery of services.”

The Report also addresses children’s issues, the difficult-to-understand terms of use and privacy by default. 

How the Report will be received and translated into new regulation remains to be seen.