AI Act, Product Liability Directive, Platform Workers’ Rulebook reach political agreement

Welcome to Euractiv’s Tech Brief, your weekly update on all things digital in the EU. You can subscribe to the newsletter here. 

“This is a historic moment. The AI Act transposes European values to a new era.”

-Commission President Ursula von der Leyen on the AI Act agreement

Story of the week: After a 36-hour negotiating marathon, EU policymakers reached a political agreement on what is set to become the global benchmark for regulating Artificial Intelligence on Saturday. As Euractiv reported, the first part of the trilogue closed the parts on open source, foundation models and governance. However, the exhausted EU officials called for a recess 22 hours after it was clear that a proposal from the Spanish presidency on the sensitive law enforcement chapter would not have a majority in the Parliament. The discussions picked up again on Friday morning and only ended late at night. The provisional agreement sees the Council obtaining its broad national security exemption, while MEPs received several concessions on the bans.

The technical work continued this week with three intense meetings. The two co-legislators have different understandings on what had been agreed on ex-post biometric identification, which Euractiv understands will only require judicial authorisation for serious crimes, whilst only notification to the data protection authorities will suffice for the rest. Meanwhile, Macron made some negative statements on the agreement, saying “I ask that we evaluate this regulation on a regular basis. And if we lose leaders or pioneers because of that, we will have to come back to it.” In other words, he did not say France would try to block the law, which it might not have the numbers to do at any rate. Euractiv understands the most sceptical countries are in touch with the Council presidency to request ‘clarifications’ in the text. Expect some theatre still to come at the COREPER debrief on Friday.

Don’t miss: EU policymakers reached a political agreement on Thursday on legislation to bring the bloc’s product liability regime in line with technological developments, notably covering digital products like software, which includes Artificial Intelligence. The Product Liability Directive (PLD) provides people who have suffered material damage from a defective product with the legal basis to sue the relevant economic operators and seek compensation. Importantly, the defectiveness of the product will be assumed if the claimant faces excessive difficulties due to the technical or scientific complexity of the product. This file has been largely underestimated by the industry, but is bound to open a new frontier of litigation, including in the form of class actions. Read more.

Also this week: 

• The UK Competition and Markets Authority is considering investigating whether Microsoft’s partnership with OpenAI equals an acquisition.
• In another blow to the EU Commission, Amazon won a €250m court case.
• The EU consumer protection department circulated the consolidated draft principles of the cookie pledge initiative, including an alternative to the ‘consent-or-pay’ model.
• EU policymakers reached a political deal on the new rules for platform workers.
• Euractiv revealed the details of the tense discussions on the Media Freedom Act ahead of Friday’s trilogue.

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Artificial Intelligence

OpenAI-Axel Springer partnership. Axel Springer, Europe’s largest publishing group, announced a partnership with OpenAI on Thursday. According to the announcement, “the initiative will enrich users’ experience with ChatGPT by adding recent and authoritative content on a wide variety of topics, and explicitly values the publisher’s role in contributing to OpenAI’s products”. Moreover “ChatGPT users around the world will receive summaries of selected global news content from Axel Springer’s media brands”. The news comes amid several news sites, including Euractiv, deciding to block a feature by OpenAI’s GPTBot from collecting their content online.

Mistral AI raises €385m. The Paris-based start-up announced on Monday that it raised €385 million and released a new foundation model, Mixtral 8x7B. The company aims at achieving “frontier-level AI capacities in the coming months”. French Digital Minister Jean-Noël Barrot commented on X that thanks to this fundraising, “France has all the assets to master artificial intelligence“.

Microsoft’s small language model. On Tuesday, Microsoft shared a blog post about small language models, writing that, after its first small language model, Phi-1, it is announcing “Phi-2, a 2.7 billion-parameter language model that demonstrates outstanding reasoning and language understanding capabilities, showcasing state-of-the-art performance among base language models with less than 13 billion parameters.”

Foundation model risks. The Ada Lovelace Institute published a paper on Thursday about the reliability of foundation models and the potential risks of their misuse. The institute parallels what policymakers can learn regarding overseeing foundation models by looking at the US Food and Drug Administration.

AI uptake. The Commission published a policy brief on Wednesday about AI in science and innovation. “Prioritising the adoption of AI technologies for scientific discovery could be the EU’s unique competitive edge,” the report says. The brief also consists of recommendations “on how to accelerate a responsible uptake of AI in science”, such as accelerating the AI uptake by scientists in the EU.

The compliance machine. The ink has barely dried on the AI Act’s agreement, and the Future of Privacy Forum has already organised a virtual forum on Tuesday about its compliance.

Competition

Partnership or merger? Last Friday, the UK Competition and Markets Authority (CMA) invited interested third parties to comment on Microsoft’s ongoing partnership with OpenAI. Providing this early opportunity is the first step of the CMA’s information gathering before launching a formal investigation. The CMA is trying to understand whether the partnership equals a takeover, namely if Microsoft has gained control over Open AI by de facto control or formally commanding 50% or more of its voting rights. Regardless, Microsoft can theoretically access confidential information and attend board meetings by having a non-voting member on the company’s board. Read more.

Amazon wins €250m tax fight. On Thursday, the EU’s top court rejected the appeal of the European Commission that, in 2017, ordered Amazon to pay back €250 million in unpaid taxes to Luxembourg. The Commission had challenged a 2021 decision of the General Court of the European Union, which annulled the Commission’s state aid charges against Amazon. The verdict is another major blow to Vestager’s tax crusade following the Apple-Ireland case. “The Commission takes note of today’s judgment,” a Commission spokesperson told Euractiv. Read more.

Just take my wallet. According to Reuters, Apple offered competitor services access to its “tap-and-go” mobile payment systems on Tuesday. The concession attempts to put the EU antitrust investigation on Apple Pay to rest as the probe scrutinises whether Apple has made it difficult for rivals to develop similar services after restricting the use of Near-Field Communication.

Listen (to your music) here. Apple may face fines and a potential ban on its App Store due to the company circumventing music services to entice its customers to options other than the App Store. The decision can be expected early next year, Bloomberg reported on Wednesday.

Epic game won. Epic Games won the antitrust case against Google over its Play app store on Monday. The game developer and publisher accused Google of charging fees of up to 30% to app developers to disseminate competitors. In January, the Court will come up with the remedies.

French cooperation. The French Data Protection Authority (CNIL) and competition authority Autorité de la Concurrence agreed on Tuesday to deepen their cooperation and review how to do so, keeping data protection and competition in mind, with a joint declaration.

Cybersecurity

The many paths to NIS2. EU countries are implementing the updated Network and Information Security Directive (NIS2), which has been in force since January, with varying degrees of progress. Euractiv interviewed Nicolas Sonder and Mailin von Knobelsdorff, PwC experts on cybersecurity, to provide an overview of the state of play. Read more.

France’s first ‘public cloud’. On Monday, Outscale announced its public cloud service received the SecNumCloud 3.2 certification from the cybersecurity agency ANSSI. Outscale is a Dassault Systèmes brand, a software company originally from the aerospace industry. The largest French cloud provider, OVHcloud, announced during an event in November that it aimed to receive certification for its public cloud service in 2024 or 2025.

UN Cybercrime Convention criticised. More than 150 cybersecurity and technology companies criticise the ongoing negotiations on the Cybercrime Convention at the United Nations. Back in April, discussions on the document reflected two camps: autocracies against democracies. Now, tech companies worry that the draft, if adopted in the last round in January, would weaken cybersecurity, erode data privacy, and undermine online rights and freedoms worldwide.

Data & Privacy

Consent-or-pay? Pledge otherwise. The EU’s consumer protection department presented the draft pledging principles for the digital advertising industry as part of its initiative to phase out cookie banners that include the provision of a third, less intrusive alternative to the pay-or-consent model. The principles will be presented on Monday and accompanied by the European Data Protection Board’s opinion. The general idea is to revise how cookie banners are designed to give only essential information on the data processing and business model at first glance, while more granular information is provided in a second layer. Read more.

Surveillance section. According to ZwillGenBlog’s post from last Friday, the US House Permanent Select Committee on Intelligence unanimously approved the Foreign Intelligence Surveillance Act (FISA) Reform and Reauthorization Act of 2023, which could result in the reauthorisation of FISA’s Section 702, with the vote on the bill expected to happen next Tuesday. According to the article, the provision would “significantly expand the government’s authority under FISA 702 by broadening the definition of ‘electronic communication service providers’ (ECSPs) whom the government may compel to assist in FISA 702 surveillance”.

Another complaint. After launching a complaint in November against the Commission with the European Data Protection Supervisor (EDPS), for using microtargeting ads on X to promote the regulation on detecting child sexual abuse material online (CSAM), NOYB launched another complaint on Thursday, this time against X.

Digital Markets Act

New digital openness coalition. On Wednesday, leading (mostly non-EU) tech companies launched the Coalition for Open Digital Ecosystems (CODE) with the declared intent of supporting growth and innovation in Europe. The initiative is driven by Google and Qualcomm, which have collaborated closely on DMA compliance in the past months. It is essentially an anti-Apple coalition meant to pressure the iPhone-maker to open up its ecosystem.

Digital Services Act

More information requests. The Commission sent a request for information to Apple and Google about the App Store and Google Play, respectively, on how they identified systemic risks under the DSA. They have until 15 January 2024 to provide information.

DSA preparatory work. The Commission published the draft implementing act detailing the DSA’s enforcement activities, such as conducting inspections, putting in place interim measures, requesting commitments and carrying out monitoring actions. Another draft implementing act provides the mandatory templates for the DSA’s transparency reports.

Gig economy

Rules for platform workers. The representatives of the main EU institutions reached a provisional agreement over the Platform Workers Directive in the early hours of Wednesday after 11 hours of negotiations. The provisional agreement entails that meeting two out of five indicators would trigger the worker’s employment status reclassification, but EU countries can amend the list of indicators. When even one worker is reclassified, labour inspectors will have to check the working relations of the other workers on that platform. The algorithm management measures include a prohibition of the use of sensitive data, human review of important decisions and the right to understand algorithm-based decisions. Read more.

Industrial strategy

Atos sold to Czech tycoon. Atos Tech Foundation’s cession to EP Equity Investment (EPEI), owned by Czech billionaire Daniel Křetínský, has been approved by the European Commission on Monday. It regroups Atos’ historic services, mainly in developing, constructing and managing digital services. The rest of Atos’ activities will change the name and become Eviden, focusing on cloud, cybersecurity and advanced computing markets. In October, the Commission granted Křetínský authorisation to buy France’s second largest media company, Editis. Křetínský further owns the originally French multinational retail company Fnac Darty.

Institutional corner

Retiring plans delayed. Roberto Viola, the long-serving director general of DG CNECT, might not be retiring as early as everyone thought. Euractiv learned that senior EU officials asked Viola to stick around until 2025 to cover the transition period with the new Commission.

Law enforcement

Still stuck. On Wednesday, Netzpolitik reported about the Law Enforcement Party’s 1 December meeting, where France said that the proportionality of the regulation was important, and the opinion of the Council’s legal service, which had also recommended stronger protection of users’ fundamental rights, should also be considered. The presidency concluded that the Council was not ready to start negotiations with the Parliament.

Media

EMFA trilogue coming up. EU co-legislators will discuss the thorny issue of protecting journalistic sources at the next negotiation round on the European Media Freedom Act (EMFA). Still, MEPs are considering postponing the agreement under the Belgian presidency if things hit the fan on the national security exemption. At the same time, several EU countries are pushing for more independence of the board of regulators. The pressure is on to reach a final agreement at the political trilogue on Friday when the only issue on the agenda will be the controversial part on protecting journalists and their sources. Read more.

Geo-blocking flipped. On Wednesday, the European Parliament adopted a non-binding resolution on the 2018 geo-blocking regulation in the digital single market. However, a last-minute amendment adopted during the plenary vote significantly changed the wording that applies to the audiovisual sector, such as streaming platforms’ films. Wednesday’s vote on this specific amendment means the opposite as it did in the original report, with lawmakers now being against ending geo-blocking for audiovisual material. Read more.

Platforms

Addictive design voted in plenary. The European Parliament adopted a resolution to make digital platforms less addictive with a broad majority at Tuesday’s plenary session in Strasbourg. The report provides a strong political signal to the Commission to present a legislative initiative on this topic, perhaps as part of the Digital Fairness Act. The text is the same as the one adopted at the committee level, with no amendment tabled. Read more.

French tax the music industry. On Wednesday, the French Ministry of Culture announced that streaming platforms’ earnings will be taxed to promote the French music industry, prompting outrage from Spotify and Deezer. This new tax will directly finance the National Center for Music, which was founded in 2020. It follows the example of the National Centre of Cinematography, which has collected a tax on movie theatre ticket prices since 1993 to promote the French audiovisual industry. Read more.

Ireland’s game-changer Code. Ireland’s new broadcasting and online regulator, Coimisiún na Meán, has published a draft binding code which might include, at a later stage, measures requiring video-sharing platforms like TikTok and YouTube to stop automatically using recommender systems based on extensive user profiling. Moreover, these companies would have to stop building profiles of those users whose age is unconfirmed or who are children. Read more.

French Tech is… US-based. Last month, French top officials were requested to use the French application Olvid or Tchap instead of any other messaging app when exchanging information. Yet, on the day of the implementation of the decision, L’Informé revealed that Olvid used US cloud service from Amazon’s AWS, which sparked a controversy over data protection concerns. On Tuesday, Olvid’s founder, Thomas Baignères, replied: “The fact that these are AWS servers is not important in terms of security, as the data is encrypted with defence-level encryption.”

Virtual worlds report. According to the final compromise amendments on virtual worlds, seen by Euractiv, digital sovereignty is “key to guarantee the EU´s ability to shape and enforce legislation in the digital environment, ensuring ethical, sustainable and human-centric virtual worlds and preserving the safeguard of fundamental rights and the values of the European Union”. The new compromise text also points out that legislation is already in place applying to different aspects of virtual worlds.

Let me disconnect. The Socialists & Democrats group urged the Commission to develop a proposal ensuring the right to disconnect. The group’s VP, Alex Saliba, said, “It has been three years since the European Parliament first called for a European law on the right to disconnect to clearly define boundaries between working and free time in the new digital era.”

What did we watch on Netflix? On Tuesday, Netflix announced that they will publish a “What We Watched: A Netflix Engagement Report” twice a year, which will be a “comprehensive report of what people watched on Netflix” over the past six months.

Pornhub probe. According to MLex, the Cypriot data protection authority has been investigating Pornhub’s EU base for at least 16 months.

Standards

Standardisation reassessment. According to a Fit For Future platform opinion, since the adoption of the regulation on European standardisation in 2012, “the standardisation environment has substantially changed,” and so the evaluation’s goal is “to assess whether European standardisation is efficient and effective for current and future needs and the current legal framework is still sufficient to respond to the new opportunities and challenges of globalisation to ensure the safety of EU citizens as well as to support the green and digital transition”. Issues, such as the involvement of SMEs, civil society and users’ access to standards, and transparency will be touched upon.

Telecom

Countries on intra-EU calls. The Spanish presidency asked member states to express their positions on the Parliament’s mandate on the Gigabit Infrastructure Act, which foresees the end of surcharges for intra-EU calls. Eight member states rejected the Parliament’s proposal, and 10 would rather extend the extension of the price cap deadline, ending in May 2024. Three of these 10 said they were open to the Parliament’s mandate. Another three said they were agreeing with the MEPs’ proposal. Six EU countries did not participate. At the last Telecom Council, Germany publicly said it was opposed, the Netherlands said it would favour a price cap extension, and Poland said it favoured the Parliament’s mandate. Another deadline to provide feedback to the upcoming Belgium presidency is 8 January. Two trilogues are also planned on this file on 25 January and 5 February, which should give sufficient time for the file to be completed before the next EU elections.

Dubai’s WRC negotiations. The World Radiocommunication Conference ended with an agreement on 15 December. One of the most important decisions concerns the allocation of the upper 6GHz bandwidth (from 6,425 to 7,125 MHz). The decision has been to identify this band for use by mobile operators, a decision that kicks in further discussions among EU countries to look up if they will open this frequency for private companies. In addition, the 0.7 GHz bandwidth has been identified for mobile operators’ use as secondary users while keeping primacy for TV broadcasters. Mobile operators argue this frequency is useful for 5G services in rural areas. Eventually, the bandwidth ranging from 3.6GHz to 3.8GHz has been primarily allocated to mobile operators.

Broadband in France. Since 2013, the French plan to speed up very high capacity networks in France has allowed to connect 36.2 million households to fibre optics, reaching a target of 84%. Yet, as of Q3 2023, only 20.6 million households transitioned to a very high capacity subscription, defined in France as a connection of 30Mb/s. The French state invested a total of €36 billion in the network’s roll-out since 2013.

Orange-MasMovil deadline. According to Reuters, the EU antitrust regulators set 15 February 2024 as the deadline to decide whether the merger between Orange’s Spanish unit and MasMovil will get the green light. The watchdog will first hear the feedback of the companies’ rivals and customers. Then it will decide on the remedies offered to the competition concerns since 28 July, when the EU stopped the acquisition, waiting for the requested information.

What else we’re reading this week:

Threads is finally available to users in the EU (TechCrunch)

How Meta’s New Face Camera Heralds a New Age of Surveillance (The New York Times)

Twitch revamps rules on sexual content (BBC)

Alina Clasen and Théophane Hartmann contributed to the reporting.

[Edited by Nathalie Weatherald]

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