IT technologies and creative use of data, which are the "new oil", are driving the economic growth of many prosperous nations. Examples of such technologies and data use range from IT outsourcing and clouds, which have been with us for many years and became "business as usual" for many entrepreneurs, to blockchain, autonomous mobility and fashionable cryptocurrencies and their initial coin offerings.
The recently adopted new EU rules for crowdfunding platforms seem very promising in terms of providing a unified legal framework for innovative cross-border financing. On the other hand, with other local regulatory rules remaining intact in each of the EU member states, the actual effect of the new unified rules remains to be seen. As far as rapidly exploding fintech business is concerned, the current buzzword is DeFi (decentralised finance). The idea of decentralised lending and deposit taking, which replace banks and other allegedly unnecessary middlemen by one IT platform, seems revolutionary and tempting; But can the existing complex regulatory rules indeed be swept aside so easily (and should they)? These and other topics are briefly out-lined below in our bulletin, giving you fresh legal/tech news from the perspective of experienced legal practitioners.
One may find the snippet about arising EU excellence centres focused on artificial intelligence ("AI") particularly interesting. While we Europeans should keep our fingers crossed that this initiative will boost our productivity, one may not deny the fact that the EU is currently significantly lagging behind the U.S and China in this area. This may be a result of various factors, but one of the most significant problems seems to be the heavy EU regulatory burden related to the innovative use of big data, which is crucial for any progress in AI. In particular, the GDPR seems to be feared most by innovative AI businesses for various reasons, such as the need to manually review significant algorithmic decisions, the broad and possibly costly right of affected individuals to demand explanations for these decisions, the so called "right to be forgotten" possibly having a crippling effect on the accuracy of machine learning, or vague rules regarding the difference between personal and anonymised data.
Although good lawyers are able set aside most of the alleged regulatory obstacles, this still costs time and money, which are rare assets among small innovators in general. The optimist expects consumers to feel safer in this regulated environment and the EU privacy mark should allegedly become valuable business wise. We have to wait and hope that the advantages of GDPR and similar stringent rules will come true sooner rather than later. However, the below mentioned historic fine for GDPR breach in the Czech Republic (and similar recent record fines amounting to tens of millions of euros imposed on British Airways or Marriot), could have just the opposite effect and drive innovation outside the EEA.
Let us know what you think and contact our technology & digitalisation group!