Technology & Digital round-up: 18 November 2022

The legal part…

• The Digital, Culture, Media and Sport Committee launched an inquiry into the operation, risks, and benefits of NFTs and the wider blockchain. The inquiry is likely to examine whether more regulation is needed, ahead of a Treasury review.

• In related news, the Treasury Committee held its first evidence session as part of its inquiry into the cryptoasset industry. The inquiry is examining: the potential risks and opportunities associated with the use of cryptoassets; their impact on social inclusivity; and the possible need for regulatory change in the future.

• Meanwhile, the Joint Committee on the National Security Strategy is asking for written evidence for its new inquiry into ransomware. The 2021 National Cyber Strategy described ransomware as “the most significant cyber threat facing the UK”.

• The Financial Conduct Authority’s Chief Data, Information and Intelligence Officer gave a speech on the regulation and risk management of artificial intelligence in financial services – saying that AI needs governance to move from fear to trust and pointing out that many of the rules in financial services are already in place.

• The Information Commissioner’s Office is consulting on how it prioritises the complaints it receives about public bodies’ handling of Freedom of Information requests. The ICO proposes to prioritise complaints where there is a clear public interest in the information that has been asked for.

• The ICO issued a reprimand to the Department for Education. Poor due diligence meant a database of up to 28 million pupils’ learning records was ultimately used by a screening company to check whether people opening online gambling accounts were 18. Had it not been for the ICO’s revised approach to public sector enforcement, the Department for Education would have been issued with a fine of over £10 million.

• For the same reason, the Information Commissioner agreed to reduce to £50,000 the £500,000 fine imposed on the Cabinet Office for the 2019 New Year Honours data breach.

• The Law Commission launched a call for evidence on how decentralised autonomous organisations can (and should) be characterised, and how the law of England and Wales might accommodate them now and in the future. The Commission explains that a DAO is a new type of organisational structure involving multiple participants online, that may rely on blockchain systems, smart contracts, or other software-based systems.

• The European Parliament adopted new legislation setting tighter cybersecurity obligations for risk management, reporting obligations and information sharing. Member states will have 21 months to transpose the revised Network and Information Security Directive (NIS2) into national law.

• A reminder for EEA exporters of personal data that the grace period to amend contracts which use the old EU standard contractual clauses ends on 27 December 2022. The new SCCs, issued in June 2021, can be found here.

• It’s been reported that the European Parliament won’t vote on the Markets in Cryptoassets Regulation (MiCA) until February 2023. This EU-wide regulatory framework is aimed at protecting investors and preserving financial stability, while allowing innovation and fostering the attractiveness of the cryptoasset sector.

• Our Regulatory & Compliance and Commercial Dispute Resolution experts discussed a recent proposal to revise the current EU Product Liability Directive. They also outlined other upcoming EU and UK reforms aimed at modernising product liability and safety rules for the green and digital age.

• Over in the US, 40 states reached a historic $391.5 million settlement with Google over its location tracking practices. This is the largest ever attorney general-led consumer privacy settlement in the US.

…and in other news

• One of the bigger news stories over the past couple of weeks – discussed at the Treasury Committee’s cryptoasset inquiry evidence session – is the collapse of major cryptocurrency exchange FTX. In an information post for FTX customers, the FCA reiterated that cryptoasset regulation is limited to registering of UK-based cryptoasset exchanges for anti-money laundering purposes. As a result, FTX was not authorised, regulated or registered by the FCA.

• New Twitter boss Elon Musk hinted at possible bankruptcy after a chaotic period during which thousands of employees were fired, the Federal Trade Commission warned Musk that he was “not above the law” and a series of fake high-profile “verified” accounts appeared on the platform following the launch of the $8 Twitter Blue subscription product.

• Meta boss Mark Zuckerberg announced the loss of 11,000 jobs. Resources have shifted onto a smaller number of high-priority growth areas, including the company’s long-term vision for the metaverse.

• The National Cyber Security Centre urged shoppers to be cyber aware. New figures show that shoppers across England, Wales and Northern Ireland were scammed out of £15.3 million between November 2021 and January 2022.

• The UK, Canada and Singapore have agreed to work together to promote and support cyber security measures for internet connected products.

• The Department for Transport and Innovate UK announced the first set of winners for the ‘First of a Kind’ competition, helping to develop novel technology which improves rail freight services and lowers carbon emissions from trains.

• And finally, a waste management firm in Gloucestershire is trialling a robotic arm with AI memory to sort plastic waste.

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