UK: Trends In Information Technology Law: Looking Ahead To 2018

Last Updated: 10 January 2018
Article by Richard Kemp

This piece looks ahead to what we might expect as IT law developments in 2018.

Unusually as we go into a new year, the main headlines of what IT lawyers can expect in 2018 are signposted at the outset: new financial services laws in January, the GDPR in May and looking ahead to Brexit in March 2019. But away from the headlines, the developing narrative is more complex. Here, the combination of [mobile+social+cloud] still carries all before it and the machine learning, blockchain and digital reality of the Fourth Industrial Revolution (4IR) are quickly gaining traction whilst Moore's Law still chugs away in the background.

What's also fairly clear as we go into 2018, and whether it's bitcoin, AI or tech valuations, is that we're currently at a rather 'frothy' part of the tech hype cycle. As the economist J. M. Keynes famously said, 'markets can stay irrational longer than you can stay solvent' so there's no telling that this will not continue through 2018. But it is worth calling to mind at the height of the dot com bubble when shares peaked in March 2000, that only 5% of the world's population had an internet connection (it passed 50% for the first time in 2017) and that no one had then foreseen the combination of [mobile+social+cloud] that five to ten years later would be the internet's 'world beater'. So, if we are towards top of a bubble now, there's precedent for thinking that we may not get it entirely right as we look out to say 2025.

Financial Services – MiFID and PSD2

Back to the present, and in January 2018, MiFID II (the Market in Financial Instruments Directive) and PSD2 (the Payment Services Directive) come into effect. MiFID II effectively takes the regulatory regime for equities trading price transparency introduced by MiFID in 2007 and extends it to trading in bonds, derivatives and most structured finance products. PSD2 takes the regulatory regime for payment services introduced by the PSD in 2009 and updates it for developments in e-commerce, the internet, mobile payments and new technologies and changing customer patterns. Both sets of rules are driven by, and in turn drive, technology change. MiFID II means rearchitecting business processes and data flows to fit the new regulatory environment and provides a great opportunity for RegTech. PSD2 provides a great opportunity for FinTech start ups. Changing financial services regulatory environments in these and other areas will continue to be an important source of work for IT lawyers in 2018.

Brexit

Despite the political progress made at the end of 2017, the shape of Brexit still looks hard to call. In a 2017 report for trade association Tech UK, 'The UK Digital Sectors After Brexit'[1] research consultancy Frontier Economics found that the UK's digital sector accounted for 16% of national income, 10% of UK employment and 24% of exports. Consequently, as so much digital business from the UK is in services not goods, the primary trade-related Brexit risks for the digital sector are from services related non-tariff barriers.  Accordingly, a 'hard' Brexit, defaulting to WTO rules based on tariff barriers for goods would not be a good option and:

"it is in the strong interests of the UK's digitally-intensive sectors that a new comprehensive free trade agreement is reached with the EU that can enable continued growth in the UK and innovation and digital transformation across the EU." [2]

Whether the calls of the large UK digital sector will get drowned out in the noise of an increasingly frazzled Brexit environment in the run up to March 2019 remains to be seen.

GDPR and data protection

GDPR will continue to be top of mind for many IT lawyers until 25 May 2018 when it enters into force and likely for a while thereafter. In the words of the Economist newspaper[3] the GDPR 'is "the most complex piece of legislation the EU has ever produced"' and "will be one of the most important pieces of legislation brought into force in 2018".  As the Information Commissioner has said, 'we're all going to have to change how we think about data protection'[4] and, as everyone is finding out, you can't just paper your way to GDPR readiness.

In addition to the rising bow wave of work in the first half of 2018, data related legal work is likely to settle back at a significantly higher level than before.  GDPR regulatory enforcement will gain traction after the summer holidays and we're likely to see over the remainder of 2018 an outbreak of litigation and the continuing weaponization of data protection claims in the employment, B2B and international contexts.

A potential curve ball to watch out for is the new ePrivacy Regulation – the source of the rules on cookies and the requirements for cookie policies. The EU published a draft regulation in January 2017 and it is still under discussion, but it looks like extending the current (2009) ePrivacy Directive significantly. Although the EU said in early 2017 that they want the new regulation to start at the same time as the GDPR, this is looking increasingly less likely, and it may be 2019 before it comes into effect.

Data governance and trust frameworks

Perhaps more significant even than this, GDPR is prompting a deeper dive across business into the governance and management of data flows within, and data sharing between, organisations. The Deepmind/Royal Free case[5] shows what can happen when you get it wrong.  Here, the ICO in July 2017 found the Royal Free Hospital had breached the Data Protection Act in sending to Deepmind unencrypted personal data of 1.6m patients for testing the hospital's 'Streams' kidney detection app. The ICO has required the Royal Free to give undertakings, including carrying out a privacy impact assessment (PIA) and commissioning a compliance audit.  PIAs in particular are becoming generally used tools for data protection compliance management.

Although GDPR and data protection will be most in the spotlight in 2018, legal teams will need to continue to focus on the other elements of data law – data security (avoidance of and responding to data breaches), data sovereignty (control over data residency) and data permissioning (ownership and licensing) – to ensure appropriate management of data assets across the organisation.

In an October 2017 Review for the DCMS, 'Growing the AI industry in the UK',[6] the authors' first recommendation was that government and industry should deliver a programme to develop data trusts, as 'a set of relationships underpinned by a repeatable framework compliant with parties' obligations to share data in a fair, safe and equitable way'.  In 2018, we'll all be hearing more about data trust frameworks for managing data sharing and data governance. In general terms, the trust framework harnesses together for a particular data sharing use case (i) a set of overarching high-level ethical principles, (ii) operating rules on who can use the data and how, (iii) technical specifications and (iv) a legal framework on what happens if something goes wrong. Increasingly, these frameworks will combine legal terms – as contracts and notices – with functionality – as software embedded rules.

The trend towards standardisation of data governance at the international level also continues to gather pace. The International Standardisation Organisation (ISO) has done great work in 2017 in publishing as international supersets (i.e. to sit above but consistently with EU, US and other privacy rules) standards on data governance (ISO/IEC 38505-1) and PIAs (ISO/IEC 29134) and a code of practice for protecting PII (personally identifiable information – ISO-ese for personal data) (ISO/IEC 29151).

Growth of machine learning

Away from the headlines, expanding communications bandwidth (introduction of 5G, investment in subsea cables) and continuing 20% year on year growth in the Cloud provide the infrastructure for the digital transformation of the 4IR.

Incorporating an AI foundation in any major software development is increasingly taken as a given. In 2000, the internet 'disappeared down a thousand foxholes' into countless developments and applications before emerging ubiquitous as Web 2.0 and the [mobile+social+cloud] combination after 2004. Machine learning, as the 4IR's 'killer app enabler' that can be trained to see patterns and make predictions, is at the 'disappearing' stage, with work going on around the world embedding it into existing applications and using it to develop new ones.

Machine learning costs have tended to be frontloaded with intensive, iterative use of training datasets, but new techniques like transfer learning (which pre-trains the model on similar data) and synthetic data (which uses computer generated data to mimic the real dataset) are set to significantly reduce lead times and on costs.  At the processor level, specially developed AI chips (like Intel's recently announced Nervana Neural Network Processor (NNP)) are also accelerating training times, and software developers are starting to pack machine learning models into mobile devices using greater compression and power efficiency.

As AI makes software cognitive and 'learn to learn', intelligent apps and analytics are starting to change the structure of work more deeply than previous technology waves; and intelligent things (whether static, like sensors: [machine learning+machine perception] or mobile, like autonomous vehicles and robots: [machine learning+machine perception+machine control]) are entering the 'hockey stick' phase of rapid growth.

The permeation of machine learning enabled software throughout business has a number of implications for technology lawyers. First, through techniques like DevOps (next generation Agile) software development is getting faster, with shorter cycles, higher deployment frequency, 'containerisation' of apps across environments and greater componentry re-use, so understanding the ownership and licensing arrangements of the whole code base to ensure correct permissioning is key. Second, through deployment techniques like SOA (service oriented architecture) and RPA (robotic process automation) software systems will increasingly communicate indirectly with many more other systems, so check the software licence grant clause to make sure calls on the licensed software by remote, indirect systems are not unexpected chargeable use. Third, check the ownership and permissioning position for the data that the software processes – whether training datasets, workload datasets or data derived from the software as analytics and insights.

Digital reality and Blockchain

In its annual tech trends report for 2018, 'The Symphonic Enterprise'[7] Big4 accounting firm Deloitte highlights "digital reality, cognitive and blockchain [as] the stars of the enterprise technology realm [that] are redefining IT, business and society in general".[8]

The Deloitte report quotes a prediction from consultancy IDC that spending on digital reality – a mix of augmented reality (AR), virtual reality (VR), mixed reality (MR) and immersive technology – will grow from $9.1bn in 2017 to over $150bn by 2021[9] as we adapt to a work environment where, like our mobile today, our AR/VR/MR device is 'always on' to communicate, learn, train and interact. This shift, the report says, is comparable to that from "client-server to the web and web to mobile [leading] to more natural and intuitive ways for technology to better our lives. Indeed our means of interface with digital information will likely no longer be screens and hardware but gestures, emotions and gazes". For lawyers, the digital reality era will bring to the fore copyright permissioning and rights legal issues about generating, communicating and adapting content. It will likely also add another dimension to copyright policy debate about Open Access and fair use.

In the Deloitte report, the blockchain – a distributed ledger that 'trustlessly' serves as a tamper-proof record of who owns what – has its place as a single component whose 'unique' is to record the exchange of assets in an open, secure financial transaction protocol and enable material improvements in security and accuracy across business processes like assets transfer registration, claims handling, trade finance and the supply chain.  Smart contracts take the blockchain, as a protocol, to the next level, as a utility of general application.

As if each of these developments – machine learning, cognitive software, blockchain and digital reality – doesn't represent change enough in its own right, it's really in their combination – particularly how insights, analytics and automation from cognitive software can work with blockchain, smart contracts and digital reality – that truly radical transformation lies. But that's probably one for 2019, not 2018.

FOOTNOTES

[1] https://www.techuk.org/insights/news/item/10086-the-uk-digital-sectors-after-brexit

[2] At page 4

[3] Ludwig Siegele, 'The Dodd-Frank of Data' (The World in 2018, the Economist)

[4] Speech to the Institute of Chartered Accountants in England and Wales, 17 January 2017 – https://ico.org.uk/about-the-ico/news-and-events/news-and-blogs/2017/01/gdpr-and-accountability/

[5] Royal Free – Google DeepMind trial failed to comply with data protection law – https://ico.org.uk/about-the-ico/news-and-events/news-and-blogs/2017/07/royal-free-google-deepmind-trial-failed-to-comply-with-data-protection-law/

[6] https://www.gov.uk/government/publications/growing-the-artificial-intelligence-industry-in-the-uk

[7] https://www2.deloitte.com/us/en/pages/about-deloitte/articles/press-releases/deloitte-releases-annual-tech-trends-report-on-strategy-technology-and-operations.html

[8] At page 2

[9] At page 75

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Richard Kemp
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions