The Bytesize Briefing with Atticus Partners - December

Welcome to the Atticus Partners Technology newsletter: the Bytesize Briefing!

Each month, we will cover the politics and policy from across the UK and European technology sectors.

In this edition, we will be exploring the British government's evolving digital?decisions, challenges to Digital Markets Act designations, amendments to the DMCC Bill, Ireland's response to European tech judgements and concerns about the European digital identity.??

For more information about Atticus’ work in the technology sector, or questions about support you require, please get in touch via [email protected].??

1. From AI summits to Cabinet reshuffles

The international AI Safety Summit, considered to be Prime Minister Rishi Sunak’s pet project, proved to be a relative success, with agreements reached to work together on AI safety research and to ‘intensify and sustain’ cooperation in frontier AI. Big Tech companies, including Meta, Google DeepMind and OpenAI also agreed to allow regulators to test their latest AI products before releasing them to the public.?

As part of a wider Cabinet reshuffle, Sunak decided to shake up the ministerial roster at the Department for Science, Innovation and Technology. Andrew Griffith has replaced George Freeman as Minister for Science, Research and Innovation, while Saqib Bhatti replaces Paul Scully as Minister for Tech and the Digital Economy.?

Continuity did prevail at the top of DSIT, with Michelle Donelan remaining in her position as Secretary of State. She happened to be in the US at the time of the reshuffle, encouraging Americans to follow the UK’s example with the Online Safety Act.?

2. DMA designations hotly contested

More tech companies are challenging their designations as ‘gatekeepers’ under the EU’s Digital Markets Act (DMA) ahead of the March 2024 deadline for these companies to comply with new obligations.?

Meta is particularly opposed to the decision to include its Marketplace and Messenger services within designation, arguing they are part of Facebook rather than separate services. Meanwhile, TikTok owner ByteDance claimed it did not hold an ‘entrenched’ position and the designation would hinder its ability to grow and challenge its more established competitors??

Apple is the latest in a line of Big Tech companies to fire shots at the EU, although details of the two cases filed have yet to be announced. The European Commission has declined to comment on these disputes, but further reasoning behind its designation decisions is likely be revealed in the coming weeks as the cases make their way through EU courts.??

3. Big Tech will have more opportunities to challenge Digital Markets Bill

The UK government has introduced amendments to the Digital Markets, Competition and Consumers Bill (DMCC) which would make it easier for Big Tech companies to challenge competition decisions reached by the Competition and Markets Authority (CMA). As part of the amendments, major tech companies will be able to dispute the CMA’s decisions on ‘proportionality grounds’ as well as the power to appeal against the level of fines based on the merit of the company fined.?

These amendments were justified by the Government as giving tech companies a chance to challenge decisions they believed were unfair. Newly appointed Minister for Tech and the Digital Economy, Saqib Bhatti, said that the changes would ‘ensure that the regulator takes proportionate action and avoids undue regulatory burdens.’ Alex Davies-Jones, formerly Bhatti’s Labour opposite, said that the changes would see the ‘appeals process weakened’ and would permit Big Tech to ‘maintain anti-competitive practices.’?

The DMCC is due to have its second reading in the House of Lords on 5 December.?

4. Ireland struggles to find its footing

2023 was a turbulent year for European tech markets, and Ireland was no exception. Despite the Emerald Isle’s reliance upon Big Tech employers, Apple is locked in a 10-year battle against the European Union over an alleged €13bn tax benefit which Ireland’s Government has asserted is lawful. Finance Minister Michael McGrath countered the opinion of a top adviser to the European Court of Justice (ECJ), saying ‘It has always been, and remains, Ireland’s position that the correct amount of Irish tax was paid and that Ireland provided no state aid to Apple.’?

The case highlights the fundamental relationship between Ireland and these companies, which has been further highlighted by the European Data Protection Board’s repeated clashes with Ireland’s Data Protection Commission over the enforcement of GDPR fines. The EDPB’s view is that Ireland is the ‘weak link in the chain’ when it comes to the data rights of EU citizens, citing the late and reluctant enforcement of a €345m fine against TikTok for failing to shield underage users’ content from public view.?

5. Industry experts warn against European digital identity

A provisional agreement on a new framework for the European digital identity (eID) system was reached by EU government in November. The finalised service will eventually be offered to all EU citizens and businesses, allowing ‘digital wallets’ to store personal information such as driver’s licences, diplomas, medical information, and provide a secure, easy way to share this information with national digital services.?

Although the eID is similar in nature to national digital ID systems already adopted by countries such as Estonia, Belgium and Finland, there has been large-scale concern about the EU’s plan.?Major industry players – including Mozilla, Cloudflare and Linux – warned the regulations ‘are likely to weaken the security of the Internet as a whole’. Similarly, scientists and researchers shared a letter highlighting how the regulation ‘radically expands’ the ability of governments to survey both their own citizens and residents across the EU, by providing the means to intercept encrypted data.??

Look ahead...

In the UK, there is still plenty of work to finish in this Parliament’s short time left before the next general election, particularly on the DMCC. Ofcom will also continue to conduct consultations throughout 2024 on illegal harms, the protection of children and online harms against women and girls.?The Data Protection and Digital Information Bill also passed its third reading in the House of Commons in November and will now move to the House of Lords.?

In the EU, meanwhile, the implementation the DMA and Digital Services Act legislation will continue to be hotly contested. The European Commission’s ability to succeed against legal challenges to its designation decisions could make or break the new European tech regime. ?

Want to find out more about what the future of tech looks like in 2024? Look out for the special end-of-year edition of the Bytesize Briefing – coming in mid-December!??

Insights from Atticus Partners

• What did we learn from this week's AI Safety Summit?

To find out more about how Atticus helps tech companies to navigate the changing regulatory and legislative landscape, get in touch with our team at [email protected] to learn more about what we can do for you.