Alison Harcourt, Professor of Public Policy at Exeter and a Visiting Professor at LSE, reflects on the implications of Brexit for the UK’s digital sector, and on the future of digital policy.
Post Brexit, the UK is attempting to redefine its place in the world of an increasingly globalised digital policy. My recent book on Brexit and the Digital Single Market examines the consequences of Brexit for the digital sector. It finds that Brexit has resulted in a loss of regulatory capacity within the UK and a new governance architecture for the EU in the digital sector.
The UK played an important historical role in steering EU policy agendas during its EU membership. It successfully pushed for a liberal agenda under the governance architectures of the Lisbon, the Convergence, the Better Regulation and the DSM Agendas. The UK’s model of market liberalisation in telecommunications policy was exported to the EU. Self-regulation was adopted in the oversight of audio-visual, e-Commerce and FinTech and online platform markets based upon the UK’s domestic Better Regulation policy with the use of codes of conduct, transparency measures, and regulatory sandboxes. Flexible implementation of EU data protection policy preserved data handling exemptions for legitimate purposes. The UK copyright model is shown to have slowed EU policy development.
However, this influence was lost with Brexit along with the attractiveness of the UK as a regulatory base. UK based companies now deal with both domestic and EU regulation meaning significant costs. They face the threat of fines from multiple states under data protection policy. Licences for copyright and digitalised orphan works need to be attained from multiple European states. Accordingly, many digital companies have relocated headquarters to an EU state with the most flight seen by pan European broadcasters, FinTech and online commerce companies.
As a result, UK citizens are receiving a large amount of content from streaming and platforms based in EU states which is not regulated in the UK. This includes the streaming services Amazon Prime Video, Netflix and Disney+ in; music platforms Apple Music, Amazon Music, SoundCloud Spotify, and Tidal; social media Facebook, Google and Twitter; and online platform services such as Amazon. UK users no longer have access to EU level or cross border dispute mechanisms such as the European Consumer Centres Network, the European Interoperability Framework, the Online Dispute Resolution network, One Stop Shop or Your Europe. Access to European services is reduced for UK citizens. Musicians, theatre performers and artists are experiencing difficulties in receiving visas to tour the UK. UK customers no longer benefit from the EU ban on roaming charges or the portability of steaming services when travelling to the EU. UK researchers have lost EU database rights.
Brexit has seen increased domestic political steer of national regulatory authorities. The Online Safety Act and DPDI Bill increase Secretary of State powers over guidance, review thresholds and fees. Regulators are facing funding cuts, increased workloads, staff shortages in addition to the loss of information exchange with their European counterparts. UK regulatory bodies no longer can access to EU level information exchange platforms such as the EU Observatory on the Online Platform Economy and the Single Digital Gateway.
The EU views the UK as a competitor on its doorstep. The UK has been granted limited EU adequacy recognition even though it has given adequacy to the EU in many areas. The UK was given only 2 adequacy decisions in financial services despite granting the EU equivalence in 28 out of 32 financial service areas. EU citizens have continued to receive EU streaming services when travelling to the UK even though UK citizens might not retain access to domestic streaming services while in the EU. UK citizens and residents can no longer register .eu domain names but EU residents can continue to register .uk addresses. EU based CMOs are no longer obliged to represent UK based organisations for multi-territory licensing of online rights for musical works, but UK CMOs continue to represent EU CMOs.
New EU governance architecture
The governance architecture of the EU is changing. Digital sovereignty and European champion policies are taking hold at the EU level. Statutory legislation is becoming more common in areas only addressed to date with self-regulation. Under the Digital Services Act and the European Media Freedom Act, the EU is harmonising national approaches to content regulation, the protection of editorial independence, media pluralism tests and the transparency of state advertising. The EU has accelerated legislation in the digital sector with introduction of the AI Act, Data Act, DORA, DMA, European Chips Act, MiCA, NIS II and the Omnibus Directive. The UK meanwhile lags behind, often relying on former versions of EU legislation as retained in the Trade and Cooperation Agreement.
Indeed, Brexit may have signalled an end to pluralist style lobbying in the EU and a return to more neo-corporatist models of representation within the sector. As Menz explains ‘strongly neo-corporatist and statist systems produce self-preserving protectionist responses’. As the UK pluralist style of policy making wanes at the EU level, the EU is taking a much more hands on approach to regulation of the digital sector following an older path of industrial policy favouring the growth of European champions and the curtailing of large US groups in European markets.
The UK is instead turning to the international level for cross border solutions rather than bilateral agreements with the EU. This can most starkly be witnessed in the area of data protection where the UK took a lead in establishing the Global Pandemic Data Alliance, developing the G7 Trade Ministers’ Digital Trade Principles, recommendations in the OECD Working Party on Security and Privacy in the Digital Economy (SPDE), WTO Joint Initiative on E-Commerce and 2023 Artificial Intelligence Safety Summit. Here it seeks to establish an alternative model to the handling of data to that of the EU.
Alison Harcourt is presenting her book, Brexit and the Digital Single Market, on November 23 at the London School of Economics. This post represents the views of the author and not the position of the Media@LSE blog, nor of the London School of Economics and Political Science.
Featured image: Photo by Franz Wender on Unsplash
