IT Challenges

There is undoubtedly no time of the year where advertising is more important than right now, the country is abuzz with the classic discussion of which brand has the best Christmas advert, has John Lewis retained the crown? December is here, and the UK is once again plunged into a frenzy of Christmas gift buying – arguably this has been made even easier by the use of weirdly specific targeted ads on Facebook and Instagram, and in some malls you might even be ‘aided’ by adverts which employ facial recognition to work out what you might be most likely to buy.

It’s important to note here that facial ‘recognition’ does not actually occur. Kiosks fitted with cameras in shopping centres can detect and analyse faces, using this data to essentially build a consumer profile. This profile may include things like race, age, and gender – somewhat more disturbingly, the profile may also include how happy the consumer is. Recognition occurs when an attempt is made to identify a subject against a database – it’s also what happens when you unlock your phone using your face.

In short, what occurs is categorisation, not identification. As such, the use of facial recognition technologies for targeted ads falls outside the scope of Article 9 of GDPR. There is also evidence to suggest that facial recognition cases are likely to be taken seriously by the EU, after a Swedish school was fined €20,000 for processing personal data more extensively than was necessary when piloting a facial recognition for attendance monitoring scheme. However, this fact arguably does very little to quell fears that advertisers are now being allowed an incredible overextension into our lives.

It also raises severe ethical questions as to how many people are aware that the adverts they are seeing, apparently randomly, are actually targeted towards them based on a consumer profile generated based on a scan of their face. This is despite the fact that GDPR also requires you to consent to cookies whenever you use a website which may then use that information to generate targeted adverts. As the UK Information Commissioner highlights – there is a significant lack of control and transparency regarding the deployment of live facial recognition technologies in public spaces.

Although cryptocurrencies have been the subject of much media attention and debate for a while now, largely due to their reputation as a chance to get rich quick or challenge the status quo due to their decentralised nature, the EU’s proposal to bring them into the legislative fold under the Markets in Crypto-Assets Regulation (MiCA) could change this forever. As criticism regarding a recent three-week ad campaign advertising cryptocurrencies on TfL services has pointed out, the unregulated nature of crypto has allowed investors to levy social media campaigns to draw attention to new currencies, prompting a sharp rise in value before developers dump their assets to gain insanely large profits. This is one of many cautionary tales surrounding crypto, however, as President of the European Commission Ursula von der Leyen notes – further regulation could allow the EU to reap some of the benefits of crypto themselves, a notion which has been echoed by the Bank of England’s deputy governor.

Proposed Changes:

Some cryptocurrencies which function in the same way as existing securities, like stocks or bonds, are already subject to EU legislation under the Markets in Financial Instruments Directive – so it isn’t totally true to say cryptos are completely unregulated. However, the proposed changes would affect virtually all other forms of cryptocurrencies.

a. Consumer Protection:

The proposal would address some of the more concerning aforementioned criticisms of the current crypto market, such as the high probability of fraud and loss of funds when compared with fiat currencies, for instance, by subjecting all crypto exchanges to consumer protection standards. This would have the effect of allowing those who fall victim to fraud, cyber-attacks or loss of funds to have a method of redress.

b. Stablecoins:

Unlike other forms of crypto, stablecoins derive their value from another asset such as fiat money or gold. As a result, their value is generally far more stable, yet they still provide an attractive investment opportunity due to their generally higher levels of annual interest. MiCA separates stablecoins into a few categories using terminology which is relatively foreign to the crypto market:

- E-Money tokens – stablecoins deriving their value for a single fiat currency

- Significant asset referenced tokens – stablecoins backed by other external assets, for example tokens backed by film licenses which could be distributed to every party owning a portion of a certain patent. Article 39 of MiCA lists the criterion for SARTs

Despite the obvious implications the Online Safety Bill has for intermediary liability, the concept appears to have shockingly little mention in the bill itself, the Online Harms White Paper and the Government’s response. Whilst OFCOM prepare themselves for what is sure to be an overwhelming extension of their current duties, it is necessary to ask what intermediaries new duties’ are under the proposed regime, as well as the implications this has on the existing concept of intermediary liability.

The previous regime, enshrined in the E-Commerce Directive, only required intermediaries to take down unlawful content once they were made aware of it. The new bill, however, noticeably imposes a much wider range of duties on intermediaries. For example, intermediaries could be required to carry out “illegal content risk assessments” as well as “children’s risk assessments” as part of their wider duty to minimise the presence of illegal content on their platforms. The more notable and arguably more stifling aspect of the OSB is that content which may be harmful to children has entered the regulatory fold, with specific legal duties to prevent and review the risk of this happening. This departs from the previous regime in which only illegal content, including terrorism-related, child sexual abuse, threats of violence and IP infringement was subject to criminal and civil law, whilst ‘harmful’ material was regulated largely by the intermediaries’ own terms of service.

Although these new duties could transform the internet into a much safer place, and arguably brings into law responsibilities that intermediaries should have already factored in to the provision of their services, it is undeniable that it produces an immense burden for intermediaries. From a recent CJEU judgment it would appear that the UK is setting a standard for intermediaries that is contrary to the E-Commerce Directive, and that the CJEU would be unwilling to impose. As the protections afforded to intermediaries by the E-Commerce Directive and by the historically lower bar for intermediary liability seek to guarantee the right of intermediaries to provide services without having to jump through an excessive number of legislative hoops, it is no wonder that some have suggested the Online Safety Bill could have the effect of stifling technological innovation.