Digital Content Proposal
In December 2015, the European Commission published its legislative proposal for a Directive on certain aspects of cross-border contract rules on the online sale of digital content, alongside a similar proposal for the online sale of tangible goods. The Directive is aimed at what the Commission calls ‘targeted harmonisation’, and if introduced will introduce specific rules on certain aspects of each EU Member State’s contract law provisions.
However, the proposal of the Commission introduces a number of novel concepts, particularly by including in the scope contracts which are concluded for a ‘counter-performance other than money, for example personal data’. While IAB Europe welcomes the recognition that there is a value exchange for online content where no money is paid, the current wording of the proposal does not define data narrowly enough and introduces provisions which are more stringent than those of the recently agreed General Data Protection Regulation (EU) 2016/679 (“GDPR”).
IAB will be advocated for a Directive which is both coherent with the GDPR and will do it’s utmost to caution legislators against the inclusion of incidentally generated data as something which is traded as a counter-performance.
The Digital Content proposal aims to make contract law applicable in cases where consumers receive digital content not just against monetary payment, but also by providing the content provider with their data. This is also intended to cover social media sites, as well as cloud hosting services. This proposal is part of a set of twin proposals, the other governing digital contracts for the sale of tangible goods.
The two priority issues identified by IAB Europe in the proposal are that in case of a termination of a contract for digital content, the consumer has a right to request the return of their personal data, as well as any other data which has been incidentally generated during the use of the digital content. For clarity, digital content in the proposed Directive can mean either actual content or a digital service, such as a social media site or cloud hosting service. Such a data portability right would only apply under certain circumstances where a consumer terminates their contract for digital content.
Overall, on the issues which were contentious for IAB Europe, the two institutions continue to seem aligned in their approach. This means that the provisions regarding the provision of data in exchange for digital content or digital services will largely defer to the GDPR whenever that data is personal. The Council and Parliament proposals only concern content that users have uploaded or created while using the digital content or service, as long as it is not used by anyone else.
The Commissions initial proposal would have created a consumer right for users to retrieve personal data, and any other data from the supplier of digital content or a digital service in case they terminated their contractual relationship. This did not align properly with the GDPR’s data subject rights.
On 26 March 2019, the European Parliament adopted both digital contract files during Plenary session. The two files focus on adding more protections for consumers when concluding contracts online; one focusing on contracts for digital content, and one on contracts for tangible goods. The so-called ‘twin directives’ are intended to work in tandem to provide coverage for both online-only services, as well as for online shopping platforms. Uniquely, the digital content directive creates a precedent for contracting against a ‘counter-performance’ of personal data in exchange for access to digital content and/or services. While this initially appeared to create many issues of overlap in terms of consumer protection as compared to the GDPR, the final directive clearly establishes that any issues regarding the handling of personal data are to be governed by the GDPR. The vote on 26 March was one of the final formal steps in a long-lasting discussion on the two files, which were initially proposed at the end of 2015. The two proposal were also a reworked version of a contract law proposal which dates back even further, which sought to create a European framework for contract law to function alongside Member State contract laws.
The Council of the EU formally adopted the proposal, as an “I/A” item, on 15 April 2019. This formal adoption marked the end of the ordinary legislative procedure. Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the supply of digital content and digital services (Text with EEA relevance) was published in the Official Journal L 136 from 22.5.2019. Member States will have to adopt the transposition measures by 1 July 2021. They shall apply those measures from 1 January 2022.