Digital Law Alert - June 2022

June’s edition of our Digital Law Alert series summarises the key digital law news alerts from across the UK and the rest of Europe.

• UK HM Treasury issues policy statement: ‘Critical third parties to the finance sector’
• Thousands of proposed amendments to the EU AI Act submitted
• Project Gigabit: Spring Update 2022
• AI chatbot becomes sentient?
• Payment schemes in the metaverse – cryptocurrencies and smart contracts
• Latest draft of the Digital Services Act rejected by European Parliament
• UK Plan for Digital Regulation - developing an outcomes monitoring framework
• Checklist for use when negotiating InsurTech agreements

UK HM Treasury issues policy statement: ‘Critical third parties to the finance sector’

In a proposal published on 8 June 2022, HM Treasury explains its objective of filling a gap in regulators’ powers to ensure that they can directly oversee services that critical third parties provide to firms. The proposal quotes the key fact that, as of 2020, over 65% of UK financial services firms used the same four providers for cloud infrastructure services. Before designating a critical third party, HM Treasury will need to consult the financial regulators and other relevant bodies and firms could also make representations to HM Treasury in relation to their own third parties.

Thousands of proposed amendments to the EU AI Act submitted

As negotiations regarding a revised draft of the EU AI Act begin, a raft of required amendments to the current version of the EU AI Act have been submitted by EU political parties. The definition of ‘artificial intelligence’ remains highly controversial. Amongst other proposals, it has been suggested that the automatic classification of Annex III/’high risk’ systems could be replaced with a list of critical use cases. Our AI specialists will keep you up to date as the negotiations unfold.

Project Gigabit: Spring Update 2022

The UK Department for Digital, Culture, Media and Sport/DCMS has released a Spring Update on Project Gigabit, the UK Government’s project to upgrade the UK broadband network through a GBP5 billion investment aimed at fast broadband availability across the whole of the UK. Our UK team reports further here.

AI chatbot becomes sentient?

The suspension of a Google engineer who suggested that the AI chatbot ‘LaMDA’ that he was working on could think and reason like a human child has been widely reported this month. Our AI specialists believe that this places more emphasis on businesses developing AI products or using AI within their businesses to consider what an ethical framework to work within might look like and to implement it – if nothing else, in preparation for inevitable AI sentience in the future.

Payment schemes in the metaverse – cryptocurrencies and smart contracts

In a recent article our Italian team considers the advantages of using smart contracts for transactions in the metaverse as balanced against the many uncertainties relating to the mass application of smart contracts, amongst other things.

Latest draft of the Digital Services Act rejected by European Parliament

As we reported last month, political agreement had been reached regarding the terms of the Digital Services Act (DSA) that aims to create a safer digital space for all users of online services, in particular by obligating platforms to remove illegal content quickly. This month, however, progress has once again stalled as one key issue in particular has been revisited – that of platforms being obliged to conduct specific monitoring for manifestly illegal content at either EU or national level. We will continue to report on progress as negotiations continue.

UK Plan for Digital Regulation - developing an outcomes monitoring framework

The UK Government’s DCMS is developing a monitoring and evaluation approach to inform progress against its Plan for Digital Regulation, which was announced earlier this month. The approach will comprise of three main elements, namely 1. an outcomes monitoring framework to monitor trends on key areas of the digital ecosystem, 2. evaluations of specific governance or regulatory measures and 3. research projects to provide an overarching view of impacts. Views on indicators that could be fed into this work have been invited for twelve weeks (closing on 5 September 2022).

Checklist for use when negotiating InsurTech agreements

Anthony Day, Partner and Nichola Donovan, Legal Director of DLA Piper have published a checklist (originally produced for Practical Law) that highlights the key legal and commercial issues to consider when negotiating and drafting a technology contract for a business in the insurance sector, available here.

The Digital Law Alert will be taking a break over the summer. We look forward to resuming in the autumn and bringing you a bumper edition of digital law news.