EU digital proposals threaten to stifle innovative business models

EU digital proposals threaten to stifle innovative business models 

At the end of last week, we responded to the Department of Business, Innovation and Skills’ consultation on proposals from Europe on new reules governing the sale of digital content which impact on consumer laws.

In our response, and with intense consultation with members large and small, we asked the UK government to push back on some of the points covered in the Draft Directive for the Online Sale of Digital Content.

Innovation in the digital economy that have fuelled the growth new businesses, spurred innovation in business models, and ultimately created jobs has been key to the games sector. We felt that some of the proposed new EU rules, however, would only stifle this innovation and growth by creating unnecessary barriers and confusion. The UK led on reforming consumer laws to make them fit for purposes for consumers and businesses.

The draft Directive, one of the first tangible proposals from the European Commission’s Digital Single Market plans, is intended to create a shared set of consumer rules for all EU countries for the sale of digital content online. The ideas in the Directive are aimed at giving consumers new rights over some digital content they enjoy for free, but without properly defining what kind of “free content” would be affected.

Its definition of digital content includes services which provide digital content – such as social media platforms  – combining what are two separate categories under current law and trying to give consumers the same rights and remedies for them. It also suggests new rules for how content can be modified after it has been provided to consumers, again without properly defining how and where this will apply.

We think these proposals, whilst well-intended, fails to recognise:

·         how games and other digital content are developed and made available to the public

·         what the consumer expects when purchasing digital content

·         the different types of data that is generated when digital content is accessed

·         how that data is used by the developers and suppliers of digital content

·         the importance of the availability of data to the digital economy.

Lots of our members were concerned when they read the draft proposals too, and after speaking to many of you, we warned the UK government that these new rules would leave both games companies and their players uncertain which rights applied to which content, and what players would get if that content proved to be “faulty”. Several important parts of the 21st century games industry, including the in game purchasing business model, the ability to games as a service with updates to content after to release, and the use of player data to improve games, would be left in legal limbo if the directive went ahead in its current form. The innovation which has helped the games industry reach new heights in the UK and across Europe – reaching a consumer market size of over £4 billion in 2015 – would stall in the face of this uncertainty.

There is already a review underway of existing EU consumer law, which the Commission has chosen to pre-empt in proposing this new directive. And this is where is gets very complex.

We have asked the UK government to make the following argument:

1.    The REFIT process and upcoming review of the Consumer Rights Directive should be undertaken to assess consumer law holistically before introducing a new directive such as this.

2.    If the directive does proceed:

i)      Digital content provided without payment should not be in scope of the directive. Defects in such content would, in most cases, do not have an impact on the economic interests of consumers. If digital content provided without payment remains in scope, significant redrafting is required to avoid confusion for businesses and consumers.

ii)     The proposals to restrict how content can be modified after consumers have purchased access would result in reduced digital innovation in the video games industry. Redrafting is required to clarify when modifications will justify remedies for consumers, or offering such updates will become too risky for businesses.

iii)    Requirements to return data and content to consumers after they terminate a contract to access digital content do not reflect the realities of the market or consumer expectations. It would be unreasonably costly, or in certain cases technologically infeasible, for video games companies to comply. Furthermore, the directive contradicts existing data protection law which allows for the return of data to consumers.

If you are interested in what how we responded to the government last time on the UK consumer protection laws, read it all here

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