Do you believe your legal system specifically encourages or hinders digital services?
Technology (3rd edition)
Armenian legislation pays attention on the digital services; Armenia regulates the electronic documents and electronic signature issues, during 2016-2017 the amendment to the Civil Code of Armenia and related laws has adopted with the aim to regulate electronic platform trading activities. Armenia encourages IT startup companies by providing tax benefits which has its positive impact on settling up and improvement of digital services in country.
It will be the true to mention that there is no limitation or restriction in Armenian law as such as regards to the digital services rendering possibilities.
As of now, profound changes need to be implemented and introduced to relaunch the Dominican Republic’s regional leadership in digital transformation. Even though well thought programs such as Republica Digital are being implemented, their success and reach will need the backing of a new legislative agenda that deals with concepts such as Artificial Intelligence, Internet of Things, OTT operators, as well as the demands for the employments of the future. Two new agendas will need to be tackled simultaneously: the connectivity and the social and digital transformation ones.
The legal system in Egypt is still in its first steps in terms of regulating digital services. Accordingly, it does not include as many restrictions and prohibitions as other jurisdictions, especially the EU and the USA. This said, with the issuance of the Cyber Crimes Law and the Press and Media Law and the anticipated issuance of the Data Protection Law, this may change and digital services may face some challenges in Egypt. Although such challenges will not be more aggressive than those in other jurisdictions.
The Estonian legal system generally encourages digital services. Estonia has for years had an open mind towards e-services and innovation in general. For example, digital signature is widely used all over Estonia. As of 1 July 2019, invoices to the public sector can only be sent in e-invoices according to the Accounting Act approved by the Riigikogu on 20 February 2019, so this illustrates that state pushes digital innovation forward with its own activity. As regard to innovation in general, then already in 2017 incorporated Estonia provisions regarding parcel-robots into the traffic act as these robots are already now part of the traffic in Estonian streets.
In addition, Estonia has implemented specific measures in order to encourage foreign entrepreneurs to start offering their digital services in Estonia. The most important measure which has recently been adopted is the e-residency program, which enables a foreigner to use public e-services in Estonia through a “digital identity”. Among other possibilities, e-residents can establish and manage a location-independent company online from anywhere in the world, declare Estonian taxes online, digitally sign and transmit documents, establish a company in one day and manage it fully online.
At the same to we can see some samples where the provision of digital services is somewhat hindered. Regulation regarding AML can be considered obtrusive, however that has mainly originated from other economic fields and found its way to digital services.
Digital services are ruled in essence by EU legislation, which has largely shaped French consumer law over the last twenty years or so. Therefore, national specificities will less be found in the legal system than in the economy.
However, France has become an ardent proponent of digital administration, in particular through simplifying and transferring procedures for the internet (for instance, with public procurement platforms and digital invoicing mechanisms) and through disseminating an increasing volume of open data (www.data.gouv.fr).
As reflected by their unparalleled development in China over the past decade, the PRC legal system encourages digital services. Even cutting-edge additions to digital services (such as blockchain) have already been adopted widely in China’s e-commerce landscape. Giants such as JD and Alibaba regularly extend their offerings, e.g., recently announcing plans to apply blockchain technology to their logistics services so suppliers and consumers can better trace products through production, transportation and storage. Other examples in this field include China’s Ping An bank and Ant Financial, which both announced blockchain-based applications to maintain ledgers for cross-border transactions. The Nanjing local government even established an RMB 10 billion investment fund to invest in blockchain projects.
Israel's legal system encourages the use of digital services by adopting regulatory and legal approach, which supports and encourages the development of new technologies and does not impose an excessive licensing regime for digital services. The provision of content services via the internet platform is not regulated. OTT services in general are not regulated although they compete with regulated content related services. Net-neutrality regulations are imposed on telecoms operators to ensure non-discriminatory access to network infrastructure, and to enable availability of any application which is provided to every consumer.
However, in order to allow the development of IoT and M2M products and services, the regulator should re-evaluate the barriers in the licensing regime for implementing such services, such as using embedded foreign sim cards or using foreign numbers or granting specific mobility licenses.
We believe further efforts could certainly be done in our legal framework to further expand and encourage digital services in our country, though the same regulatory and legislative opening and support should certain be made available, as stated above, in the traditional infrastructure sector.
While there exist certain issues in the legal system that could hinder digital services to some extent (see Opinion 2), the Japanese government has adopted, and continues to consider, various measures to change the legal system to encourage digital services. For instance, the Regulatory Sandbox was introduced as one of the measures under the Act on Special Measures for Productivity Improvement for the purpose of allowing businesses to conduct demonstration tests and pilot projects quickly and collect data that may contribute to regulatory reforms.
The development and utilisation of digital services in Malaysia has been strongly advocated by the government. Specific agencies and incentives have been instituted to facilitate the development of the digital economy, such as MDEC. MDEC has set up a Digital Hub to attract technology investments, support local technology innovations and create a sustainable digital ecosystem in Malaysia.
The government revealed various initiatives to accelerate the adoption of digital technology in Malaysia and to boost the digital economy at the 29th Multimedia Super Corridor (“MSC”) Malaysia Implementation Council Meeting in October 2017. One initiative was the “Cloud-First” strategy, where it would introduce a method of faster delivery of information technology services such as data sharing and online transactions in which resources are retrieved from the Internet through web-based tools and applications, as opposed to direct connections to servers. Led by MDEC, the government is also developing a National AI Framework, an expansion of the National Big Data Analytics Framework.
Regulatory and governmental initiatives have been implemented and/or proposed over the past years to facilitate the development of digital services, particularly in the financial technology sector.
In 2018, the MOF launched the National Regulatory Sandbox Initiative to create a brainstorming group consisting of regulators and selected industry players to enable innovators to experiment and test their technological solutions/products which either require regulatory framework or which may potentially impact a regulatory environment in a conducive space.
The issuance of the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 by the SC and its revision of its Guidelines on Recognized Markets has smoothened the introduction of DAX operators into Malaysia and clearly sets out requirements for entities intending to operate DAX systems in Malaysia, which in turn facilitates the regulated implementation of DAX services in the country. On 4 June 2019, 3 DAX operators were approved and registered by the SC.
The implementation of the Interoperable Credit Transfer Framework by BNM has resulted in a boom of ‘e-money’ and ‘e-wallet’ systems in Malaysia, which paved the way for the expansion of cashless transactions in the Malaysian economy and interconnectivity of such systems with other digital services in Malaysia. However, venturing into the ‘e-money’ and ‘e-wallet’ business will necessitate going through significant regulatory red tape as multiple approvals and/or licenses from various bodies may be required for the same.
The Malaysian government intends to impose a service tax on digital services (“Digital Services Tax”) which are imported by consumers in Malaysia under a business-to-customer regime with effect from 1 January 2020, to level the playing field between local and foreign digital service suppliers, and to provide an avenue for taxation of the digital economy. The Service Tax (Amendment) Bill 2019 relating to the Digital Services Tax was passed in parliament on 8 April 2019.
The Maltese Government’s efforts to embrace new technologies such as AI and cryptocurrencies indicates that the legislator is dedicating significant time, energy and resource to sustain the rapid development of digital services in Malta. With Malta being located on the fringes of the European Union, digital services have presented the single biggest development in Malta’s economic development in the past 20 years.
Moreover, technologically neutral laws are being implemented in most areas, enabling digital services to develop to its fullest potential without limitations relating to the channel of distribution.
New Zealand has cultivated a fairly permissive regime in its approach to digital services, which is likely to encourage use and development. Laws are often drafted in a way that is technology-neutral and regulators tend to be conscious of encouraging, rather than hindering, digital services. Having said that, as noted above, many innovators are demanding more certainty around a legal framework specifically designed to deal with the unique issues arising in the digital arena.
On the one hand, the guide for cloud computing (Orientierungshilfe – Cloud Computing vom 09.10.2014) provides detailed instructions on how to use cloud-based services which provides much clarity in this area. This is even more true for the financial services sector, where the whitepaper Merkblatt – Orientierungshilfe zu Auslagerungen an Cloud-Anbieter issued by the supervisory authority provides decent guidance. On the other hand, data protection regulations are very strict, throughout Europe due to the GDPR.
In December 2015, the European Parliament introduced a Directive on certain aspects concerning contracts for the supply of digital content. Legal scholars claim that the proposal for the Directive on Digital Contracts is a “milestone” towards a common framework for the digital economy . The digital content directive pursues a future-proof approach. It includes all categories of digital content and accepts data as potential consideration. According to the directive, digital content is e. g. a service allowing the creation, processing or storage of data in digital form, where such data is provided by the consumer (for example Cloud Computing).
The directive came into force on 11.06.2019 and the member states of the European Union have to transpose it in their national law within the next two and half years. The directive aims to fully exploit the potential of e-commerce in Europe. It faces the challenges of different national mandatory consumer contract law rules in each member state as well as the lack of clear contract rules, which hindered the development of digital services and digital content in Europe up to now, (recital 3 of the digital content directive). An unified legal framework for digital content within the European Union is able to encourage digital services due to improved legal security.
At the same time, the directive improves consumers’ rights. It establishes a strict liability for the suppliers in Art. 10 of the digital content directive and increases their risk having to compensate damages. Thus the directive might also hinder digital services.The concrete effects for digital services cannot be conclusively assessed at the moment. In any event, its impact on digital services should not be underestimated.
The government realises that Indonesia contains great economic potential in digital sector. To respond to challenge in this sector, the government in 2017 has issued the President’s Regulation No. 74 of 2017 on Roadmap on National Trading System Electronic-Based or also known as e-Commerce Roadmap.
The e-Commerce Roadmap is perceived as an official statement from the government that it supports the development of e-commerce and digital sectors. The e-Commerce Roadmap serves as a set of guidelines for the government in executing government programs with the purpose to foster growth in e-commerce and digital sectors. The e-Commerce Roadmap sets out details regarding the implementation of each program such as the type of program, output, the responsible government institution, and timeline for execution. It also covers many aspects of e-commerce and digital business such as funding, taxation, consumer protection, human resources, communication infrastructure, logistic, and cyber security.
The implementation of e-Commerce Roadmap is aimed to ensure that Indonesian regulatory environment is ready to embrace the growth in e-commerce and digital sectors.
The Pakistani legal system creates a conducive environment for the growth of digital services in Pakistan, as a large majority of digital services continue to be provided without many conditions or restrictions. However, the communication network/ infrastructure that facilitates digital services is tightly regulated.
Our legal system is aligned with the EU legislation in the field of digital services. At the EU level, as well as in Romania the digital environment is regulated by laws that are currently outdated (see as an example the legislation for the electronic commerce sector, which was enacted in 2000), as well as encompassing many grey areas, since many aspects of the digital environment are largely unregulated. As a consequence, the current frameworks as well as case law fail to provide legal certainty for the development of digital services.
Korea’s current legal system hinders digital services. There are a number of bills that have been proposed which, if adopted, would encourage the development of new technology and digital services. However, as of now, Korea’s regulatory regime remains largely “positive regulation-based”, meaning that only those acts which are specifically permitted by law may be performed.
The Spanish legal system enacts laws according to the European Union legal system. Therefore, most of the Spanish regulations have been harmonised according to European Union law. We do not believe our system differs much from others in the EU in this respect.
Digital services are ruled in essence by EU legislation. The provisions set out in Swedish legislation are often of a general character, with supplementary information in the preparatory works. Sweden strives for being in the forefront when it comes to digital services and the legislation is not hindering this development.
The Swedish tech-market has been seen continuous and rapid development for a long time. In 2017 Forbes ranked Sweden as the best country in the world for business. The technology friendly system has enabled many Swedish tech-companies to flourish. In addition to this, Sweden is widely considered to be one of the leading countries in Europe when it comes to technology start-ups.
As for legislative measures that encourages digital services and development, it should be mentioned that it is possible to apply for generous tax deductions for employees working with R&D.
Although our legal system may not have specific barriers to hinder or block digital services, the interpretation of the existing laws and statutes tend to discourage innovated digital services. Many on-line digital service providers are facing compliance issues recently, including being required to obtain certain license or permit originally applicable to the “brick-and-mortar” businesses.
Turkish legal system is developing in the direction of encouraging digital services. However there are still certain regulations and practices which could interfere with digital services in practice. For instance, access ban procedures and content liability provisions regulated under the internet laws can at times be applied in an excessive manner and therefore, might be problematic in terms of social media services and other digital services provided through internet. That said, this is an area that is gradually improving for the positive and on that note, the Ministry of Justice recently (in May 2019) prepared and announced the judicial reform strategy document which introduces comprehensive changes and improvements to the Turkish judicial system, including the re-visiting of the internet laws on access banning, with a focus on freedom of expression and the methods of blocking access on the internet. Therefore we might expect the continuance of the positive improvements on encouragement of digital services in the days to come.
Regulations and practices in intellectual property and e-commerce are generally compliant with the rules and practices in the European Union. Therefore, international companies providing digital services can usually adapt to and comply with the Turkish laws without much need to alter their existing practices. It might be argued that the foregoing is encouraging both foreign digital services to be launched in Turkey and also for digital services which are provided in Turkey to be launched abroad without significant alterations and thus, related costs.
With the digitalisation of conventional services such as banking, insurance and health services, the laws have already started shifting to allow more room for transactions to take place in the digital medium, such as rules on e-signature.
The UK legal system (when viewed in combination with the economic environment) is currently seen as conducive to digital startups and is seen as the epicentre for developments in AI and machine learning, globally. DLA Piper has run three iterations of its Tech Index, https://www.dlapiper.com/en/uk/focus/2018-european-tech-index/overview/ assessing the trends in digital innovation and growth prospects (and potential blocks). The 2018 edition highlighted that the key areas of focus are cyber security, IoT, AI and robotics, FinTech and Digital Transformation.
Ongoing concerns over cyber-attacks are still high among almost half of companies interviewed; yet only one quarter have response plans in place, which leaves those unprotected open to a major attack.
The research highlights concerns over compliance regulations, staff skills and investment which could hold development of FinTech back.
The U.S. legal system generally encourages the growth of digital services by having a legal climate that supports the freedom of contracting parties to fashion the terms that govern their relationship. The U.S. does not have an excessively burdensome licensing regime for digital services so that there are low barriers to entry and the potential for robust competition. Constitutional ﬁrst amendment protections encourages the development of digital services by mandating that any regulation must be content neutral.
Recently, the FCC rolled back its "net-neutrality" regulations that were designed to ensure non- discriminatory access to network infrastructure, and regulatory agencies greenlit mergers that have resulted in a greater concentration of digital service providers. Whether these developments have anti- competitive eﬀects in the digital services market remains to be seen.
From a privacy perspective, Australia's legal system encourages the development of digital services. The Privacy Act 1988 (Cth) has been drafted on a principles basis, meaning the law facilitates advancement in digital services as it is not technologically specific. Furthermore, most potential liability under the APPs can be avoided by an organisation obtaining express consent from the individuals whose personal information it intends to collect, hold, use and disclose. Finally, the Privacy Commissioner is known to approach privacy breaches in a conciliatory manner, and has demonstrated a focus on changing attitudes toward privacy compliance.
From a business perspective, Australia is generally considered a hub for start-ups and scale-ups, with market conditions conducive to innovation and growth. This includes the availability of government grants and tax allowances for innovative projects. Digital services are also becoming increasingly used by government agencies, with the My.Gov platform in particular being pivotal toward this transition. There is, however, some industry concern regarding the Telecommunications and Other Legislation Amendment (Assistance and Access) Act 2018 (Assistance and Access Act) which was enacted in December 2018. The Assistance and Access Act provides a framework for national security and law enforcement agencies to compel a wide array of technology providers (such as carriers, carriage service providers, providers of electronic services with more than one end user in Australia, certain software providers and equipment manufacturers) to provide access to encrypted communications and devices. Although the Assistance and Access Act was enacted to address the difficulties that encrypted communications and devices pose for law enforcement and national security agencies seeking to combat terrorism, organised crime and other national security threats, some industry groups are lobbying for changes, claiming that the broad provisions of the Act are discouraging technology investment in Australia.