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Digital rights and wrongs

What role can competition law and enforcement really play in addressing concerns arising from our digital economy?

Digital rights

Introduced by Federal Innovation Minister Navdeep Bains last May, Canada's proposed Digital Charter is seen either as a launch pad for serious enforcement of privacy and competition laws against the powers of Big Tech or as a vague, politically-motivated enunciation of motherhood statements.

"The Digital Charter looks a little fluffy" to many observers, says Bill Hearn, an expert in regulatory law and partner with Fogler Rubinoff LLP in Toronto. "The criticism is that there's no substance, there's no law, no regulations. There are no new rights here. The cynic would say it's Trudeau's talking points for the upcoming election.

Hearn was one of four panelists in a session on Competition Law and data issues held in October at the CBA's Fall Competition Law Conference.

The Charter includes ten principles, from universal access to transparency to data portability that the government says will be at the core of government policy in an era of big data, with all the economic benefits, challenges, and threats that result from this period of rapid change.

"This charter does not make Canada a leader in any way," Hearn told CBA National. "In fact, we're a laggard. We do not have a digital policy, but it's a step in the right direction. It tells me that issues of competition, data privacy, and threats to Canadian democracy are now on the federal government's radar."

Chantal Bernier, the former Interim Canadian Privacy Commissioner, addressed the issue from a privacy perspective. Bernier, who now heads the privacy and cybersecurity practice at Dentons in Ottawa, sees the Charter more as a logical evolution of Canada's privacy policy.

"It's an excellent reflection of the issues that are currently brought to the fore in the debate on privacy," she said in an interview. "It does address the issue of combatting hate and violent extremism on the internet. It does address the issue of protecting against the threat of disinformation. It also talks about having a level playing field to make sure the online marketplace is good for every kind of business."

Any legislative changes that will flow from the Charter won't be introduced until after this month's federal election. But Bernier doesn't see the question as a partisan one. "I think this is one area where both (major) parties see the urgency to act, to modernize the context of e-commerce so that our companies can fully take advantage of it while our citizens and consumers have enough trust to make sure that this economy grows and flourishes."

A couple of things seem clear. The Personal Information Protection and Electronic Documents Act, passed in 2000, is in pressing need of updating to give the Privacy Commissioner greater enforcement powers, including the ability to fine violators. Minister Bains suggested the revised law would permit "significant fines" based on a percentage of revenue in cases where companies fail to protect privacy.

The government is also looking for the Competition Bureau to become more active in taking on cases involving Big Data. In an unusual move, Minister Bains has written an open letter to Competition Commissioner Matthew Boswell, calling on the Bureau to collaborate with his department in considering among the other things, the impact of digital transformation on competition and the effectiveness of current competition policy tools.

While the Privacy Commissioner has been involved in cases involving Facebook and Google in the past, the Competition Bureau has been relatively absent, aside from a relatively minor deceptive advertising case against Amazon in 2017.

That all looks as if it's about to change. Boswell has promised to ramp up enforcement in the digital environment and appointed a new Chief Digital Enforcement Officer. In September, the Bureau launched a call-out to the business community looking for examples of conduct in the digital economy that are harming competition, including in online search, social media, and display advertising. Hearn thinks that significant enforcement actions on the digital file can be expected in 2020 from the Bureau.

Also participating in the panel were competition lawyers from Europe and the U.S. "The approach that's being taken in Canada is more of a comprehensive approach to dealing with digital issues, similar to some of what we've seen in Europe," according to Alex Okuliar, a partner and antitrust specialist at Orrick, Herrington & Sutcliffe LLP in Washington. "The United States is still trying to arrive at a consensus approach to how to deal with this," he told CBA National.

Privacy law in the U.S. tends to be more fragmented, says Okuliar. It's derived from common law or in some cases, tailored privacy laws such as one dealing with children's privacy. But U.S. antitrust law is written with enough flexibility that it allows regulators to deal with new business models and competitive dynamics as circumstances change, he continued.

"The awareness in Canada is very much the same as in Europe," says Christian Steinle, a partner at Gleiss Lutz in Stuttgart. "We can learn a lot from the Canadian debate and vice versa."

Germany's Federal Cartel Office made headlines this year when it ordered Facebook to halt combining user data among its group of platforms, including Instagram and WhatsApp, unless it first gets the express consent of users. The Bureau said that Facebook was using its monopoly position to conduct "exploitative abuse."

Facebook appealed the ruling, and in August, a German court blocked the Cartel Office's decision, with lengthy appeals expected. Steinle, says the Facebook case shows how fraught the whole intersection of data protection and competition policy has become.

Whatever the outcome of that particular case, regulators and legislators have to learn how to be nimble, says Steinle. "We will need some sort of balanced regulation that is quicker, that is more suitable for this rapidly growing digital economy but which must not be too extreme."

"We have to remember that these platforms are creating a lot of benefits for consumers and business partners," Steinle continued. "The traditional tools of multi-year investigations and then a final decision that can be appealed and then after seven or eight years finally we've got legal clarity. This is not going to work in a digital environment where markets change within months and not years."