Implementation deadline for EU Digital Content and Digital Services Directive

EU – ECOMMERCE

The Directive entered into force on 11 June 2019 and Member States will have until 1 July 2021 to implement it into national legislation. The Directive aims to harmonise key aspects of the laws surrounding the sale of digital content and supply of digital services to consumers at an EU level.

Key date(s)

• December 2015 – Initial proposals for legislation to deal with digital content and digital services considered.
• 22 May 2019 – The Digital Content and Digital Services Directive (the “Directive”) published in the Official Journal of the European Union after approval, and came into force on 11 June 2019.
• 1 July 2021 – Deadline for national implementation by Member States of the Directive.
• 1 January 2022 – Deadline for national legislation to come into force.

Status

• When initial discussions were held in 2015, only the UK had in place any rules designed to cover either the supply of digital content (e.g. applications, e-books, photos, or downloadable films, music, or games) or digital services (e.g. cloud computing, pay-per-view content, or social media platforms).
• With digitisation a relatively new, but fast-moving and growing phenomenon, the European Commission considered that it would not take long for individual Member States to begin proposing their own legislation, and therefore adopting a harmonised approach across the EU at an early stage would be preferable for all stakeholders.
• The novelty of the nature of the goods and services involved, as well as the broader considerations of applicable rights and remedies available to consumers in relation to them, resulted in protracted discussions.
• The finalised Directive was ultimately published in the Official Journal of the European Union on 22 May 2019 and entered into force 20 days following its publication.
• The Directive will need to be transposed into domestic law by Member States by 1 July 2021. As the implementation deadline falls after the UK Brexit transition period ends on 31 December 2020, the UK will not be obligated to transpose this Directive into national law.

 What it hopes to achieve 

• The Directive aims to harmonise key aspects of the laws surrounding the sale of digital content and supply of digital services to consumers at an EU level.
• The European Commission has previously noted that the current discrepancies between consumer protection laws applicable in different Member States are discouraging consumers from purchasing, and traders from offering, such products and services on a cross-border basis.

Who does it impact? 

• The scope of the Directive covers the sale of digital products and the supply of digital services to consumers (including providers of software-as-a-service solutions, such as video sharing and other forms of file hosting).
• The Directive applies regardless of the sale method, but there are some exemptions from the rules in respect of certain sectors (including digital content relating to financial or gambling services).

Key points 

1. Higher level of protection

• • The Directive provides higher levels of protection to consumers in relation to digital content and services, aligning the position more with rights associated with ‘traditional’ physical goods and services, but adapted to the particular, unique nuances of digital content and services.
  • For example, the Directive provides that the digital content or services must fit the description, quantity, and quality etc. initially made regarding it, it must receive the updates detailed in the contract, comply with any trial or preview periods, and if a business is unable to remedy defects within a reasonable amount of time, the consumer is entitled to a price reduction or full refund, amongst others protections.

2. New concept of ‘digital service’

• • The Directive introduces ‘digital service’ as a new concept, which covers software-as-a-service solutions, including video and audio sharing platforms, social media platforms, and games provided in a cloud computing environment.
  • The Directive clarifies that the quality standards and associated remedies applicable in respect of the sale of digital content also apply to the provision of digital services.

3. Personal data

• • Where consumers provide personal data in exchange for digital content or services (i.e. instead of making a payment as consideration), the quality standards required under the Directive will also apply to such content or services. Although this is subject to an exclusion if the personal data is provided exclusively for the purpose of supplying the content or service, or if there is an attendant legal obligation on the supplier.
  • This personal data update, and the new concept of ‘digital services’, will result in consumers having rights in respect of a broader range of services.

4. Harmonisation versus variation
   • The intention of the Directive was to harmonise the rules and consumer expectations across the EU.
   • However the Directive does provide for some latitude for Member States when they implement respective national legislation and areas which are subject to national law (e.g. regarding the right of redress) and so there will likely be some degree of variation between Member States.
5. Exceptions
   • Not all digital content or service contracts to consumers will be within the scope of the Directive. There are exceptions in a range of contexts, including relating to healthcare, gambling, financial services, where there is an open-source licence software element, or where digital content or services are provided by a public body or as part of a performance or event.

This blog post provides an overview of a key recent or upcoming development in digital regulation in the UK or EU as part of our horizon scanning timeline which can be found below.

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