Anyone who lived through the 2008 banking crisis would be wary of principles-based regulation. It became a byword for the incompetence of the Central Bank of Ireland and the then Irish Financial Services Regulatory Authority.
In fairness to the Irish authorities, they were not alone in adopting a light touch when it came to regulating the banks. The view was that the financial services industry was so vast and so complex that the resources required to closely scrutinise banks could not be justified. There was also a widely accepted argument that too much regulation would stymie growth and innovation in the industry. We know better now.
At its simplest, principles-based regulation set out broad parameters for how banks should operate rather than implementing and policing a lot of detailed rules and regulations. It was predicated on the presumption that the people who ran the banks saw the bigger picture and how it was in their long-term interest to adhere to the principles and benefit from a stable banking system. They didn’t.
Looking at the approach being adopted by Coimisiún na Meán in respect of video-sharing platforms, it is hard not to see history repeating itself.
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The commission has published an online safety code which implements the 2018 EU Audiovisual Media Services Directive. The Irish code takes on an outsize importance in the EU context, as the commission is the lead regulator in this regard for most of the big platforms by dint of their European headquarters being in Ireland. As a result, Facebook, Instagram, LinkedIn, TikTok and others come under its purview.
[ Regulating social media is an impossible job but someone has got to at least tryOpens in new window ]
The audiovisual media directive has as its goal the mitigation of the potential harm caused by the content hosted on these platforms. It sets out some obligations (aka principles) that the platforms must adhere to. The main one is prohibiting the uploading of harmful content.
Beyond that, the platforms must prevent children from accessing certain types of content. It specifies that platforms should have a system in place for verifying the age of people viewing content and providing parental controls.
There are very significant fines for noncompliance – up to €20 million, or 10 per cent of turnover.
The weakness of the code is that – as with the banks – it is up to the platforms to determine how they are going to comply. If published submissions to Coimisiún na Meán from the platforms and their representatives are any guide, the issue as to what constitutes compliance is going to be hotly contested.
The submissions from platform owners such as Meta and Google tend to confine themselves for the most part to practical consideration such as the timeline set by the commission.
Not surprisingly, X is a little more forthright, telling the commission last August that it “reserves its right to challenge the lawfulness of the code. We reserve our position and all rights at this time, regarding CnaM’s legislative and procedural approach, including in relation to further guidance being issued.”
Most platform owners seem to have left it to their lobby group Technology Ireland – part of Ibec – to put the commission on notice. Technology Ireland doesn’t hold back, warning the commission that its members, which include TikTok, “are very concerned that many provisions of the code cut across the Digital Services Act’s (DSA’s) full harmonisation efforts and that they apply an overly prescriptive rather than outcomes-based approach. These aspects of the code fail to achieve, and/or are disproportionate to, the code’s objectives and, moreover, they fail to recognise evolving risks and solutions in this area.”
There are various ways of interpreting this statement, but it would be only prudent to read it as saying that when push comes to shove, the platforms will be going to court if they think their business models will be detrimentally affected. Any such case would almost inevitably end up in the European court.
Given that the purpose of the directive is to fundamentally change the way video-sharing platforms go about their business, conflict seems inevitable if Coimisiún na Meán stands its ground on the online safety code.
Again, there are echoes of the banking crisis and the failure of the financial regulator to stand up to the banks. One of the reasons for this was a lack of political support, due in part to the significance of the banking industry – particularly foreign-owned banks – to the economy.
There is an obvious read across to the role that owners of the various video-sharing platforms play in the economy these days.
As a consequence of the reforms that followed the banking crisis, the European Central Bank took over the regulation of systemically important banks in the euro zone, including AIB and Bank of Ireland. Likewise in the area of data protection, the European Commission has taken direct responsibility for regulating the largest entities after years of friction between Brussels and the Data Protection Commission here.
Something similar is likely to happen with regard to online safety if Coimisiún na Meán does not show sufficient ambition and tenacity.
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