AI Regulation in the U.K. — New Government Approach

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On July 18, 2022, the U.K. Government published a paper on its proposals for AI regulation “Establishing a pro-innovation approach to regulating AI” (the AI Paper). This was published alongside the Government’s AI Action Plan, the first update provided since the Government published its National AI Strategy in September 2021.

The AI Paper provides for an alternative approach to AI regulation in the U.K. when compared with the recently proposed draft legislation for AI regulation in the EU (the EU AI Act). The U.K. Government favours a more decentralised and less regimented approach: guidance, rather than legislation; sector-based, rather than cross-sector application; regulated at sector level, rather than centrally; and with a looser definition of what constitutes AI for the purposes of regulatory application. This is intended to make the U.K. an attractive environment for AI innovation, with more flexible and pragmatic regulation, although AI businesses operating in multiple sectors will potentially need to review and comply with more than one set of principles and address conflicts between them.

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UK’s Data Protection Reform Proposals Show Distinct Divergence from EU Rules

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The UK government has recently published proposals to amend UK data protection legislation with moves towards divergence from EU rules and regulation following the UK’s decision to leave the EU (“Brexit”). The Data Protection and Digital Information Bill (“DPDI Bill”) proposes to make significant changes to existing UK data protection legislation, including the UK General Data protection Regulation (“UK GDPR”) and the Data Protection Act 2018 (“DPA”). The proposals include some measures that will result in a significant divergence, particularly for companies operating on a pan-European basis. While some compliance obligations will be relaxed, most of the changes can best be described as “similar but different” in approach. It remains to be seen what the final text will look like when the bill is passed into law, with some of the more radical proposals already having been dropped from consideration. A crucial point of consideration for UK legislators when the DPDI Bill is making its way through the various stages of the legislative process in the Houses of Parliament will be whether this legislation remains sufficiently similar to the EU’s General Data Protection Regulation (“EU GDPR”) that the UK is able to retain its adequacy status for the purposes of exports of personal data from the EU to the UK by companies operating internationally.

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New Tools for International Data Transfers: European Commission Adopts New Standard Contractual Clauses

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The European Commission recently adopted a new set of Standard Contractual Clauses (SCCs) for organizations to use in compliance with the EU General Data Protection Regulation requirements for transfers of personal data from the European Economic Area. The previous SCCs were outdated and did not cover many common data processing scenarios. Organizations will have an 18-month transition period to adopt the new SCCs, but many parties will need this time to re-examine their dataflows and review their internal compliance procedures to meet the exacting new standards.

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TikTok Facing Billion-Pound Legal Challenge in Children’s Data Privacy Lawsuit

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TikTok is facing a potential legal claim in the U.K. brought by the former Children’s Commissioner for England, Anne Longfield, on behalf of millions of children in the U.K. and EEA who have used the social media app. Claimants in the action could be entitled to over $1 billion pounds in damages.

This action follows fines issued by the U.S. Federal Trade Commission in 2019 and the Korea Communications Commission in South Korea in 2020 for mishandling children’s data. TikTok has also previously been investigated by the U.K.’s Information Commissioner’s Office, which ordered TikTok in 2019 to delete data associated with a linked app and set up an age verification system for that function.

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Marriott Cyberattack Fine Reduced as ICO Shifts Penalty Policy

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More than two years after receiving a massive initial fine, hotel chain Marriott International, Inc. reduces a cyberattack penalty by more than 80%. A shift in the United Kingdom’s Information Commissioner’s Office (ICO) calculation policy, along with other mitigating factors, led to the significant decrease. While the ICO reinforces the importance of responsibilities of data controllers in managing sophisticated cyberattacks, this latest development marks a continued shift away from turnover-centric penalty policies.

For the full alert, visit Faegre Drinker’s website.

British Airways Faces Significantly Reduced £20M Fine for GDPR Breach

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At £20 million, the fine imposed on British Airways for its infringement of the General Data Protection Regulation is the biggest fine of its kind in the history of the U.K.’s Information Commissioner’s Office (ICO). Whilst markedly lower than the fine initially proposed, the process by which the revised figure was reached provides some interesting insights on the factors that regulators will take into account and is a clear sign that despite the current economic climate, the ICO is not afraid to enforce strict GDPR compliance.

For the full alert, visit the Faegre Drinker website.