(a) Not cleared from scrutiny (b) (c) Cleared from scrutiny; Drawn to the attention of the Digital, Culture, Media and Sport Committee, the Business, Energy and Industrial Strategy Select Committee, and Exiting the European Union Committee
(a) Communication from the Commission: Completing a trusted Digital Single Market for all The European Commission’s contribution to the Informal EU Leaders’ meeting on data protection and the Digital Single Market in Sofia on 16 May 2018; (b) Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions—Artificial Intelligence for Europe; (c) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Tackling online disinformation: a European Approach
Digital, Culture, Media and Sport
(a) (39779), 9403/18 + ADD 1, COM(18) 320; (b) (39669), 8507/18 + ADD 1, COM(18) 237; (c) (39680), 8578/18, COM(18) 236
1.1The European Commission has adopted a number of non-legislative communications providing an overview of progress with the implementation of the Digital Single Market (DSM) Strategy—the Commission’s attempt to create an effective EU-wide single market for digital goods and services—as well as identifying further activity on artificial intelligence and online disinformation during the remaining period of the legislative cycle.
1.2The overarching Communication (“Completing a trusted Digital Single Market for all”) reiterates the economic logic of the DSM: that the creation of a functional single market for digital goods and services within the EU could contribute €415bn per annum to the GDP of the EU28 by eliminating barriers to trade, encouraging digitisation of businesses, and creating trust in digital goods and services. The Communication notes that significant progress has been made to deliver the DSM Strategy across a range of legislative proposals. An annex provides a detailed overview of the 29 initiatives which have already been adopted or where a political agreement is in place, and those where the institutions have yet to reach an agreement.
1.3In a separate communication on tackling online disinformation, the Commission describes the rise of disinformation—which it defines as misleading or outright false information that is created or shared online for malicious purposes—across the EU, as well as the drivers which amplify this content, including algorithms and click-based digital advertising models. The Communication states that such disinformation poses a threat in sowing distrust in institutions and building societal tensions, and that domestic and foreign actors can potentially manipulate policy making and societal attitudes through disinformation. It also states that measures taken by online platforms to date, particularly social media platforms, have not been sufficient to tackle the spread of disinformation online, necessitating EU action.
1.4The most significant proposal to tackle online disinformation announced in the Communication was the development of an industry Code of Conduct. This Code, which is a voluntary and non-binding document which will apply to the industry stakeholders that choose to participate in it, was subsequently published on 26 September 2018. The Commission will monitor its implementation by industry and, if the results prove unsatisfactory, propose further actions by the end of 2018, potentially including regulation. Other proposals include launching a study to examine possible gaps in relation to the identification of online sponsored content; creating an independent European network of fact-checkers; and using the Horizon 2020 work programme to mobilise emerging technologies to combat disinformation.
1.5The Parliamentary Under Secretary of State at the Department of Digital, Culture, Media and Sport (Margot James) states that the Government is “broadly supportive of the EU’s actions in this area, and do[es] not believe that such action will prevent the UK taking action in this area”.
1.6In a separate Communication relating to artificial intelligence, the Commission set out a “European initiative on Artificial Intelligence”. To boost the EU’s technological and industrial capacity and Artificial Intelligence(AI) uptake across the economy, the Communication states that the EU as a whole (public and private sectors) should aim to increase investment in AI to at least €20 billion by the end of 2020 and aim for more than €20 billion per year over the following decade.
1.7To prepare for socio-economic changes brought about by AI, the Commission states that it will seek to support the efforts of Member States, which are responsible for labour and education policies, by setting up dedicated (re-)training schemes with financial support from the European Social Fund, gathering analysis to anticipate changes to the labour market and the skills mismatch across the EU to inform decision making, encouraging business-education partnerships to attract and retain AI talent and foster continued collaboration, and inviting social partners to include AI and its impact in their joint work programmes.
1.8The Communication also notes that having an appropriate ethical and legal framework is important to facilitate trust in AI, and states that:
1.9In the Government’s Explanatory Memorandum, the Minister (Margot James) notes that the Communication is not a legislative proposal, no actions are required, and there are no financial implications for the UK or for UK businesses or the third sector arising from it. The Minister also notes that the UK’s own AI report ‘Growing the Artificial Intelligence Industry in the UK’ “sets out similar initiatives to those recommendations made in the [Commission’s] AI Review”. The Minister concludes that the Government will carefully scrutinise the implications of any detailed proposals which may arise from the Communication.
1.10We have taken note of the Government’s views regarding these non-legislative Communications on progress of the Digital Single Market, Artificial Intelligence, and tackling online disinformation. We note the Minister’s statement that the Government has “been a strong supporter of the DSM Strategy” and “supports swift agreement on the outstanding legislative issues of the DSM Strategy, in line with recent European Council conclusions.” The Government is also supportive of the actions outlined in the Communication on tackling online disinformation (document b), we have taken note of the industry Code of Conduct regarding online disinformation. We ask the Minister to ensure that the progress report on its initial implementation is deposited with the Committee for scrutiny when it is published. Regarding the Communication on Artificial Intelligence (document c), we note the Minister’s assessment that proposed EU actions in this policy area is closely aligned with the Government’s own findings, and that the Government has signed a Declaration of Cooperation with 24 other Member States to help develop a coordinated plan on AI by the end of 2018.
1.11On EU exit, the Government’s intention to cease to participate in the Digital Single Market will mean that the legal arrangements which give effect to it will no longer apply to the UK. On the basis of our ongoing scrutiny of the wide range of Digital Single Market legislation, we have identified a range of effects that this will have:
1.12Other implications of EU exit which are particularly salient for the sector, but which are not directly related to the Digital Single Market Strategy itself, relate to:
Customs procedures affecting online cross-border sale of goods: Unless the Government can secure arrangements as part of the future economic partnership which permit frictionless trade in goods, including preserving the effects of the intra-EU framework for cross-border VAT payments, the UK’s exit from the Single EU VAT Area would mean that exports of goods from the UK to the EU and vice versa would be subject to physical custom controls to ensure the correct amount of VAT is paid at the EU’s external border (in contrast to the current situation, where there are no such controls and movements of goods are monitored via the EU’s VAT Information Exchange System). This would potentially cause delays as well as cash-flow issues for businesses exporting to the EU. If other duties / customs procedures became applicable these would be likely to further increase costs and delays. UK consumers purchasing products from the EU27 would also be affected by delays and higher prices, as inbound parcels from the EU27 would be subject to the same customs processing as parcels from other countries and handling fees would be charged; and
1.13As documents (b) and (c) are non-legislative, we clear them from scrutiny. We retain document (a) under scrutiny in order to keep a watching brief on the implications of EU exit for the UK digital sector. We draw these documents to the attention of the Digital, Culture, Media and Sport Committee, the Business, Energy and Industrial Strategy Committee and the Exiting the European Union Committee.
(a) Communication from the Commission: Completing a trusted Digital Single Market for all The European Commission’s contribution to the Informal EU Leaders’ meeting on data protection and the Digital Single Market in Sofia on 16 May 2018: (39779), 9403/18 +ADD 1, COM(18) 320; (b) Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions — Artificial Intelligence for Europe: (39669), 8507/18 +ADD 1, COM(18) 237; (c) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Tackling online disinformation: a European Approach: (39680), 8578/18, COM(18) 236.
1 European Commission, Completing a trusted Digital Single Market for all .
2 European Commission, ANNEX—Digital Single Market legislative initiatives 2015–2018 .
3 The Communication identifies the following initiatives as already adopted: Decision on the use of the 470–790 MHz frequency band; Regulation on cross-border portability of online content services; Regulation as regards rules for wholesale roaming markets; Regulation and Directive on permitted uses in copyright for print-disabled persons and implementing the Marrakesh Treaty; Regulation to promote Internet Connectivity in local communities (Wi-Fi4EU); Regulation on Consumer Protection Cooperation; Regulation addressing unjustified geo-blocking; Council Regulation and Directive on Value Added Tax for e-Commerce; Regulation on cross-border parcel delivery services; Audio-Visual and Media Services Directive. Since the publication of the Communication, the following initiatives have also been adopted or a political agreement between the institutions has been reached, meaning that they are expected to be adopted in the near future: Council Regulation establishing the European High-Performance Computing Joint Undertaking; European Electronic Communications Code; Body of European Regulators for Electronic Communications; Regulation on a framework for free flow of non-personal data; Regulation establishing a Single Digital Gateway; Council Directive on Value Added Tax for e-publications.
4 The Communication identifies the following files as ones where adoption has not yet taken place: Directive concerning contracts for the supply of digital content; Directive concerning contracts for the distance sales of goods; Directive on copyright in the Digital Single Market; Regulation on broadcasting organisations; Regulation on ePrivacy; Regulation on protection of personal data by the Union institutions and bodies; Regulation on the EU Cybersecurity Act; Directive on the combatting of fraud and counterfeiting of non-cash means of payment; Regulation on promoting fairness and transparency for business users of online intermediation services; Directive on the re-use of public sector information (recast); Regulation on the implementation and functioning of the .eu Top Level Domain name.
5 European Commission, Tackling online disinformation: a European Approach .
6 European Commission, EU Code of Practice on Disinformation ().
7 Explanatory Memorandum from the Government (tackling online disinformation) ().
8 European Commission, Artificial Intelligence for Europe ().
9 Declaration: Cooperation on Artificial Intelligence ().
10 Explanatory Memorandum from the Department of Digital, Culture, Media and Sport (artificial intelligence) ().
11 Professor Dame Wendy Hall and Jérôme Pesenti, Growing the artificial intelligence industry in the UK ().
12 European Commission, EU Code of Practice on Disinformation ().
13 Regulation (EU) of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation).
14 HM Government, The future relationship between the United Kingdom and the European Union ().
15 European Commission, EU negotiators reach a political agreement on free flow of non-personal data ().
16 Free flow of non-personal data, chapter 28 ( ).
17 Directive (EU) of the European Parliament and of the Council of 10 March 2010 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services (Audiovisual Media Services Directive) (Text with EEA relevance).
18 Thirty-Seventh Report HC 301–xxxvi (2017–19), chapter 6 ().
19 House of Commons Library, The abolition of mobile roaming charges and Brexit ().
20 See Letter from the Minister (DCMS) to the European Scrutiny Committee ().
21 HM Government, Copyright if there’s no Brexit deal ().
22 European Commission, Notice to stakeholders brexit eu domain names.pdf ().
23 Thirty Fifth Report HC 301–xxxiv (2017–2019), chapter 1 ().
24 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’), OJ L 178, 17.7.2000, p. 1.
25 Guardian, Google News says ‘adiós’ to Spain in row over publishing fees ).
26 House of Lords EU Committee, Written evidence submitted by COADEC ().
27 Letter from the Chief Secretary to the Treasury to the Chair of the European Scrutiny ().
28 Twenty Third Report HC 301–xxii (2017–2019), chapter 3 ( ).
29 Financial Times, VAT: Brexit’s hidden border dilemma ().
30 House of Lords EU Committee, Written evidence submitted by TechUK ().
Published: 30 October 2018