The UK Digital Regulation Cooperation Forum (DRCF) – an initiative between the Competition and Markets Authority (CMA), the Information Commissioner's Office (ICO), Ofcom and, from 1 April 2021, the Financial Conduct Authority (FCA) – has published its Work Plan for 2021 to 2022.
The Work Plan sets out how the four regulators propose to cooperate on the regulation of the digital ecosystem in the UK. An overarching theme of the Work Plan is engagement with stakeholders, giving digital businesses operating in the UK an opportunity to inform and shape the regulatory response. Digital businesses should not only monitor the regulatory developments, but also engage with the consultations and ensure that their internal processes covering digital technology, data and innovation are equally aligned so they can respond effectively to forthcoming regulation.
DRCF's Key Priorities for 2021 to 2022
The Work Plan identifies three priority areas for cooperation between the regulators:
1. Responding strategically to industry and technological developments. The Work Plan identifies four strategic projects on which the regulators will work together:
- Design frameworks – to encourage the design of online frameworks to promote certain regulatory outcomes, e.g. privacy standards.
- Algorithmic pricing – building on the CMA's Algorithms and consumer harm paper, the ICO's AI and data protection guidance and other resources, the regulators plan to identify common regulatory approaches with a view to reporting in Q4 2021 on tools and resources to better assess and audit the use of algorithms, particularly in choice architecture.
- Digital advertising technologies – to develop a plan for coordinated action to address competition, consumer and privacy harms, particularly in the context of personal data use in business models exploiting advertising-funding streams.
- End-to-end encryption – to assess to what extent increased privacy might compromise the transparency and oversight of services, which may ultimately harm consumer switching, competition and innovation.
2. Joined-up regulatory approaches. The Work Plan identifies three areas of joint work in relation to:
- Data protection and competition regulation (led by the CMA and the ICO).
- Age Appropriate Design Code and video-sharing platforms (led by the ICO and Ofcom).
- Wider digital regulation landscape (work with other regulators responsible for digital markets such as the Advertising Standards Authority, Gambling Commission, Intellectual Property Office, Prudential Regulation Authority and others).
3. Building skills and capabilities. The Work Plan seeks to develop practical ways of sharing knowledge, expertise, capabilities and resources, for example in AI and data analysis.
Multiple regulatory moves across Europe have "digital" firmly within their sights. For a flavour:
- The European Commission continues its Digital Single Market initiative with the Digital Services Act and Digital Markets Act proposals, building on initiatives such as the EU Platform to Business Regulation regulating conduct with regard to online platform transparency and self-referencing activities;
- New German legislation came into force this year (well ahead of similar EU initiatives) designed to enable the German competition authority to intervene far earlier in relation to a catalogue of potentially abusive practices by firms active across different markets; and
- A new UK 'online harms' legislative framework will create a new duty of care in respect of online content, with the CMA advocating tailored codes of conduct that would be enforceable against the largest digital firms.
Cooperation between regulators in this field (even within the same jurisdiction) has faced challenges to date. The DRCF's terms of reference clearly note that it is a non-statutory voluntary network, which does not have a decision making role and does not provide formal advice or direction to its members. However, the very objectives of the DRCF are to achieve coordination and sharing of experience regarding the core responsibilities of the DRCF membership – communications regulation, data privacy and consumer protection – to develop a common approach to the policy areas in which each regulator is individually empowered to regulate, conduct enforcement activities and advise the UK Government. The latter sections of the Work Plan deal specifically with equipping the DRCF with further resources such as establishing a dedicated DRCF secretariat, suggesting that the forum might evolve into a formal statutory body in its own right.
A core component of the Work Plan is consultation with relevant stakeholders. Firms will need to be alive throughout the year to opportunities to shape the UK's approach to digital markets regulation. Although the UK is no longer formally bound by new EU digital initiatives, there is a risk of the creation of a distinct and over-burdensome national regime, with consequences for firms whose business models depend on cross-border digital market revenues. The time for engagement with these and other regulatory initiatives is now, to ensure that a pragmatic approach is achieved.