Legal & Government Affairs Update Issue 6 - 2017
The Gig Economy – Innovation but at what cost?
Matthew Taylor’s recently published review of modern working practices has prompted me to look at an ever-increasing concern – that is the growing tension between new business models driven by technological advancements and the need for regulation to stay apace with these innovative developments.
For those not familiar with the report, Matthew Taylor is the Chief Executive of the Royal Society of the Arts and was tasked with considering how employment practices need to change in order to keep up with modern business models.
This is, of course, not just a question from an employment perspective. Innovation in the digital economy also raises challenges relating to data privacy for example. How our regulators evolve in response to these changes is, and will be, critical to the growth of the digital economy in the UK.
But these are not new conundrums. Workers’ rights and employment statuses have been under intense scrutiny for many years; particularly in light of the burgeoning gig economy.
The gig economy is characterised by the prevalence of short-term contracts and freelance, “payment by the job” work. Businesses such as Uber, Deliveroo and CitySprint all rely heavily on such working practices. And there is no doubting that these innovative businesses have all introduced clear benefits for consumers – but is this to the detriment of workers’ rights?
Critics of the gig economy point to exploitative practices and the financial insecurity for individuals. Supporters, on the other hand, point to the flexibility and the abundance of opportunities which these models present. There will always be winners and losers in any economic model. But there must still be protective measures in place for workers.
The Taylor review therefore aims to strike a balance between the public interest in having a strong and vibrant economy which supports innovation and growth, alongside a recognition that a certain level of regulation and worker protection is necessary.
Elizabeth Denham, the UK Information Commissioner, highlighted the similar challenge being faced in the data protection field during her recent speech at the 30th annual conference of Privacy Laws and Business.
Entitled ‘Promoting privacy with innovation within the law’, Denham’s speech focused on the ICO’s challenge of making sure that people’s fundamental privacy rights are not sacrificed in the name of innovation.
Take Uber for instance. Just as it has faced criticism for its employment practices, authorities have also scrutinised its use of customer data. Or consider the recent case of Snapchat’s latest feature, ‘Snap Map’. The popular video and picture sharing mobile app now allows users to opt-in to sharing their precise location with friends. Although from a data protection perspective, Snap Map’s guidance makes it clear that a user’s location is made visible, this feature has led consumers to question how their personal data is being used.
That is a key theme in all of this. The digital economy depends on the trust of consumers to engage with it. Public trust and confidence is key, whether that is in respect of employment rights or data security.
So it follows that it is important to protect workers’ rights and appreciate the economic and social benefits that well thought out regulation can bring. But at the same time, our law makers must ensure that the over-application of legislation does not stifle innovation and starve the provision of new services.
Similarly, we must recognise the importance of data protection and the central role it plays in technological innovation and instilling trust in the digital economy. However, it is equally important to remember that economic growth and emerging business models often flourish when policies promote permissionless innovation. Technological and digital growth is a key driver for the UK economy and we do not want this to stagnate.
Readers may recall that the Conservative government made a pledge in their manifesto to establish a regulatory framework in law to underpin the digital economy. Theresa May, who commissioned the Taylor review, has also stated that the government will respond in detail to his recommendations later in the year. However, faced with the difficulties of Brexit, as well as operating as a minority government (albeit with the support of the DUP), it seems unlikely that the Conservatives will introduce any substantives changes in the near future.
In the meantime, the public debate will continue. Whatever happens, it is clear that it is a balancing act in which people must be the focus. There must be protective measures, whether that is fair rights for workers or stronger data protection for consumers. But at what cost to innovation?
Case Law Updates
Google fined record breaking €2.42 billion euros by European Commission for competition breaches
Following years of investigations, the European Commission has fined Google £2.1 billion for breaching EU antitrust rules – the largest antitrust settlement in history. The Commission ruled that Google had abused its market dominance by promoting its own comparison shopping service in its search engine result, thereby demoting the services of others and giving itself an illegal advantage. This meant that Google was stifling competition and not offering European consumers a genuine choice of services. Google is now considering whether to appeal the decision.
Following the decision, the European Union is now appointing a team of technology watchdogs to monitor whether Google complies with the Commissioner’s order to make its search engine results fairer.
Ofcom Review of Security Guidance
Ofcom is seeking views on the changes it proposes to make to its published security guidance for telecoms providers. As the UK’s communications regulator, Ofcom is responsible for setting and enforcing regulatory rules for various sectors, including fixed-line and mobile telecoms providers. In particular, companies providing public communications services and network are under an obligation to ensure that their offerings are secure and reliable. The existing guidance was published in 2011 and later revised in 2014. However, in view of the increasing number of threats to the security of communications services, Ofcom now feels it is appropriate to update the guidance again.
The consultation will run until 7 September 2017 and more information, including how to respond, can be found at: https://www.ofcom.org.uk/consultations-and-statements/category-1/review-security-guidance