Towards a European digital transformation: data, artificial intelligence, intellectual property and competition

On February 19, 2020, the European Commission published its strategy for a European digital transformation that benefits citizens, businesses and society (press release available here). This strategy proposes promoting digital solutions to foster an open and democratic society, with a dynamic and sustainable economy. The European Commission identifies the digital transformation as a key factor in the fight against climate change and in achieving the technological transition, with the intention of positioning Europe as a leader in the digital sector.

To implement this strategy, the European Commission has published: (i) the Communication on Strategy for Data and (ii) the White Paper on AI. These proposals are part of the digital agenda planned for the 2019-2024 period, headed by the European Commissioner for Competition, Margrethe Vestager.

• White Paper on Artificial Intelligence (“AI”)

The White Paper on AI proposes a regulatory and investment-oriented approach with a twofold purpose: (i) to promote the uptake of AI, and (ii) to address the risks associated with certain uses of this new technology. This is based on the principles of an “ecosystem of excellence” to create the right incentives to accelerate the adoption of AI-based solutions along the value chain and an “ecosystem of trust.” To build this trust, in the absence of a common regulatory framework, existing EU rules on consumer protection and data protection—such as the existing directives on safety and product liability—will continue to apply, with no restriction as to the possibility of adjusting the rules according to the specific needs of AI systems. This is discussed in more detail in a supplementary report.

A specific, new regulation is proposed based on a high-risk approach, which consists of imposing mandatory requirements on AI applications that may involve higher risks associated, for example, with the sector concerned (such as health, mobility or law enforcement activities). In these cases, AI systems must be transparent, traceable and ensure human oversight. The authorities must be able to test and certify the data used in the algorithms.

For AI applications that do not pose a risk, voluntary regulatory schemes are proposed, to which operators may opt to adhere to guarantee the quality of their applications.

The Commission has opened a public consultation until May 31, 2020, to allow interested parties to comment.

Stressing the importance of data in today’s economy and society, the Commission also presents the strategy for the free flow of data for the next five years, focusing on measures and investments to support the data economy in Europe. These measures seek to keep the European Union at the forefront of the data economy, while observing and promoting the fundamental data protection values on which it is based.

The Commission aims at setting up a single European data space where data can circulate throughout the European Union, in compliance with European values and regulations. This will be achieved by establishing a legislative framework for the governance of these spaces that is committed to transparency and clarity, and favors experimentation (through sandboxes). To this end, “European data pools” should be created enabling Big Data analytics and machine learning, especially in sectors such as manufacturing, agriculture, health and mobility.

The Commission intends to move forward together to (i) ensure the availability of data between the different actors, favoring the exchange of data between the public and private sectors (likely through the “Data Act” planned for 2021), with the implications this may have for competition law; (ii) overcome existing imbalances when it comes to SMEs; (iii) ensure data interoperability and quality; (iv) reduce dependence on external strategic infrastructures by investing in and strengthening Europe’s capabilities and infrastructures for hosting, processing and using data; and (v) empower data subjects with regard to their rights, in particular by enhancing portability rights.

From the point of view of competition law, the Communication proposals on data entail:

• The necessary adaptations to competition law, within the framework of the implementation of ex-ante regulations for Big Tech platforms;
• the potential analysis of the use of data in the area of merger control; and
• in some cases, the need to share data.

• Conclusion

Throughout the year, the Commission is expected to make further progress in promoting the European model of digitization and building a single regulatory framework to avoid fragmentation of the internal market. The goal of maintaining a level playing field remains a priority. In this regard, imposing data sharing obligations and adopting more specific regulations for Big Tech platforms are looked upon favorably. These issues are being analyzed by the EU Observatory on the Online Platform Economy.

Although the European Commission’s ideas and proposals are quite broad in scope, it remains to be seen how they will be implemented. We hope to have more details on its development during the second half of 2020.

Authors: Cristina Vila, Adaya Maria Esteban and Mireia Prat

This post was created jointly by the Intellectual Property and Competition Departments.