EU Commission Invites Stakeholders Feedback on Draft AI Regulation
On April 26, 2021, the European Commission announced that its draft proposal for the new EU Artificial Intelligence Regulation (“Draft AI Regulation”) is currently indicated to be open for feedback until July 15, 2021.* The Draft AI Regulation was published on April 21. Please refer to our blog post here that provides an overview of the Draft AI Regulation and its potential impact.
Developments in Cookie Regulation: French CNIL Declares Intent to Audit Websites for Cookie Compliance
On April 2, 2021 the French Data Protection Authority (the “Commission Nationale de l’Informatique et des Libertés” or “CNIL”) published its intent to start auditing websites for compliance with cookie regulations. This publication comes following a large number of developments and actions taken by the CNIL to further improve and guide organizations through cookie compliance. The CNIL had issued several recommendations, guidelines and cookie tools to raise awareness on the importance of this topic, with a final set of guidelines published on October 1, 2020 following public consultation rounds (“Cookie Guidelines”). The CNIL had determined that a 6-month grace period would apply following publication of the Cookie Guidelines. This grace period ended on April 1, 2021 and the CNIL now expects companies to be compliant with its recommendations and guidelines. The CNIL has confirmed that it may make use of the totality of its corrective powers to remedy non-compliance with the rules, including issuing (public) sanctions. In light of the increase in scrutiny on cookies in the EU (and the US pursuant to certain state laws), organizations with websites / platforms operating in the EU (and U.S.) may want to reconsider their cookie practices and start carrying out cookie audits.
EU Commission Issues Draft AI Regulation
On April 21, 2021, the European Commission (EC) issued its eagerly awaited draft proposal on the EU Artificial Intelligence Regulation (Draft AI Regulation) – the first formal legislative proposal regulating Artificial Intelligence (AI) on a standalone basis. The Draft AI Regulation is accompanied by a revision of the EU’s rules on machinery products, which lay down safety requirements for machinery products before being placed on the EU market. The new draft Machinery Products Regulation – proposed by the EU Commission on the same day – intends to tackle safety issues that arise in emerging technologies. The Draft AI Regulation (which appears to have borrowed a number of principles from existing EU legislation, including the EU General Data Protection Regulation 2016/679 (GDPR)) has an intentionally broad scope, and regulates the use of AI in accordance with the level of risk the AI system presents to fundamental human rights and other key values the EU adheres to. AI systems that are considered to present an “unacceptable” level of risk are banned from the EU, and “high-risk” systems are subject to strict requirements. AI systems which are considered to present a lower risk level are subject to transparency requirements or are not regulated at all. Companies engaged in the development, manufacturing, importation, distribution, servicing, and use of AI – irrespective of industry – should assess to what extent their products are implicated and how they will address any regulatory requirements they are subject to. The Draft AI Regulation foresees maximum administrative fines of up to €30m or 6% of total worldwide annual turnover in the event of non-compliance – meaning fines are higher than the ones under the GDPR.
EU Council Agrees on Proposed ePrivacy Regulation
On February 10, 2021, the Council of the European Union (which includes representatives of the European Union (EU) member states, hereinafter Council) reached an agreement on the ePrivacy Regulation proposal that governs the protection of privacy and confidentiality of electronic communications services (ePrivacy Regulation).
The first draft of the ePrivacy Regulation was approved by the European Commission in 2017 and has since been under discussion in the Council. The current agreement in the Council comes shortly after Portugal took over the Council presidency (on January 1, 2021) and released a revised draft of the ePrivacy Regulation (on January 5), which was the 14th draft including the original EU Commission proposal. The present agreement is therefore a breakthrough in the negotiation process and allows the Portuguese Council presidency to start negotiations with the European Parliament on the final text.
European Data Protection Board Issues Schrems II Recommendations
Following the Court of Justice of the European Union’s (“CJEU”) decision in Data Protection Commissioner v Facebook Ireland Ltd and Maximillian Schrems on 16 July 2020 (“Schrems II”), the European Data Protection Board, tasked with overseeing compliance with the GDPR (“EDPB”), on 11 November 2020 issued its anticipated recommendations describing how controllers and processors transferring personal data outside the European Economic Area (“EEA”) may comply with the Schrems II ruling. These recommendations are applicable immediately but are open for public consultation until November 30. Information on submitting public comments is accessible here.
In Schrems II, the CJEU invalidated the EU-U.S. Privacy Shield program (“Privacy Shield”) and potentially required supplementary protections to be implemented when Standard Contractual Clauses (“SCCs”) are used to ensure an ‘essentially equivalent’ level of data protection. Under the GDPR, personal data transfers outside the EEA to jurisdictions which are not found to provide an ‘adequate level of protection’ to the data, are restricted unless appropriate safeguards are implemented. The Privacy Shield and SCCs were two key appropriate safeguard mechanisms used to legitimize transfers of personal data outside the EEA to ‘non-adequate’ recipient countries, referred to as “Third Countries.”
European Data Protection Supervisor Issues Schrems II Guidelines
Following the Court of Justice of the European Union’s (“CJEU”) decision in Data Protection Commissioner v Facebook Ireland Ltd and Maximillian Schrems on 16 July 2020 (“Schrems II”), the European Data Protection Supervisor, tasked with overseeing compliance with EU data protection laws by the EU institutions (“EUIs” and “EDPS”), issued guidance on 29 October 2020 on how EU institutions should comply with the Schrems II ruling (“EDPS Guidance”). In Schrems II, the CJEU invalidated the EU-U.S. Privacy Shield program and potentially required additional protections to be implemented when Standard Contractual Clauses are used. Both are key legal mechanisms used to enable transfers of personal data outside the EU.
French Council of State Partially Annuls CNIL Cookie Guidelines on Use of Cookie Walls
On June 19, 2020, the French Conseil d’État (“Council of State”) issued a decision partially annulling the Guidelines of the French Data Protection Authority (the “CNIL”) on cookies and other tracking tools (“Guidelines”). The Council of State ruled that the CNIL’s Guidelines could not prohibit the use of ‘cookie walls’, a practice which consists of blocking user access to a website where the user refuses to consent to cookies and other tracking tools. Nevertheless, the Council of State confirms the Guidelines on other key points, such as the requirement to facilitate the right to withdraw consent to cookies, the retention period for cookies and the information requirement for cookies not subject to a consent requirement.
French Council of State Upholds €50m CNIL Fine against Google
On June 19, 2020, the French Conseil d’État (“Council of State”) issued a decision upholding the €50 Million fine imposed against Google LLC by the French Supervisory Authority (the “CNIL”). On January 21, 2019, the French CNIL had issued a fine against Google’s U.S. headquarters for failure to comply with the EU General Data Protection Regulation’s (“GDPR”) fundamental principles of transparency and legitimacy. Please refer to the relevant Sidley Data Matters’ blog post on the CNIL decision here. The CNIL found that Google had insufficiently informed Android users about their data processing activities, given the complexity of Google’s privacy policy and terms & conditions, and that the consent obtained from them through the use of pre-ticked boxes was insufficient to serve as a legal basis for processing used for targeted advertising. This was the first and highest regulatory fine the CNIL had issued on the basis of the GDPR.
German DSK Issues GDPR Fining Methodology Guidelines
Recently, the Association of German Data Protection Authorities (“Datenschutzkonferenz” or “DSK”) issued guidelines setting a GDPR fining methodology (“Fining Methodology”). GDPR enforcement across the EU has picked up over the past year. This Fining Methodology has been issued at the time of a significant increase in GDPR enforcement action across the EU. The European Data Protection Board (“EDPB”) reported a total of 281,088 national enforcement actions being initiated as of May 22, 2019 (approximately one year after the GDPR’s entry into application). Since then, data protection authorities across the EU have been initiating enforcement and fines on a daily basis. In particular, in the UK, the Information Commissioner’s Office (“ICO”) has issued two notices of intention to fine of €114m and €215m for failure to implement appropriate data security measures.
European Data Protection Board Adopts Data Protection by Design and by Default Guidelines
On 13 November 2019, the European Data Protection Board (“EDPB”) adopted guidelines on the GDPR’s data protection by design and by default principle (“Guidelines”). The Guidelines provide further guidance into the technical and organizational measures and safeguards that data controllers must take into account when designing their processing activities. The EDPB encourages early consideration of data protection by design and by default principles (“DPbDD”) and considers DPbDD to be at the forefront of GDPR compliance. Data controllers, processors and technology providers should consider re-assessing their processing operations and products against the standards put forward in the Guidelines.