No deal? Then stand by for a “digital Dover”
When just 89 lorries turned up in early January for a traffic management rehearsal, staged to understand the impact of the UK crashing out of the EU with no deal, Transport Minister Chris Grayling was roundly mocked for seeming so woefully under-prepared. But it at least showed an awareness that the sudden loss of freedom of trade will quickly lead to 20,000 vehicles a day needing to be parked in Kent until they can clear burdensome new customs checks.
Margot James, Minister of State for Digital at the Department for Culture Media and Sport (DCMS), should not even expect that level of understanding. With the Government regularly highlighting the contribution of digital industries to the economy - £118.4 billion annually or 7% of total GDP - you might expect a contingency plan to be in place for a hard Brexit. But when did DCMS start to reach out to the industry to discuss what no deal might mean? Monday.
That’s right - with just 12 weeks to go until our 29th March departure, the state decided it was time to look into a sector which is so complicated that even the European Commission has been unable to figure out how it works, effectively parking the planned ePrivacy Regulation as a result. Of course, James and DCMS are hostages to Theresa May’s strategy of insisting there is only one possible deal and refusing to allow for any other options to be considered. As Tuesday’s thumping defeat in Parliament revealed, it is not a view shared by two-thirds of MPs.
So what will happen to UK digital activities - from search and display advertising through to online publishing and e-commerce - if we end up with no deal? In all likelihood, virtually the entire industry will carry on as usual, but it will be breaking the law and could face serious consequences as and when regulators in both the UK and the EU decide to act.
There are two reasons why digital will become an outlaw in this way. Firstly, it will take years for the EU to recognise the UK’s data protection laws through an adequacy ruling. Even though our Data Protection Act maps directly onto GDPR, there is a bureaucratic process to go through which could be every bit as gruelling as those customs checks at Dover. Until the UK is considered adequate as a third country, however, any data transfers from the EU to the UK would be illegal, unless the parties have put standard contractual clauses in place.
But these will be necessary for every partner across the digital eco-system, meaning thousands of new contracts to be negotiated and signed-off. That’s not work that can be done in a bare three months. (You will still be able to send data from the UK to the EU, by the way, but you won’t be able to get it back.)
One company that will not suffer as a result is Google - it has the US-EU approved Privacy Shield to allow it to continue with data transfers. But only where these stay within its own estate. So advertisers and publishers will yield even more power and money to this virtual monopoly.
Secondly, the digital industry has been clutching at the IAB’s transparency and consent framework (TCF) to keep it on the right side of both GDPR and PECR. Unfortunately, a ruling in November 2018 by the French data protection authority CNIL against a geo-location targeting firm Vectaury blew a hole in TCF (although IAB argues this is not the case.)
With no compliant framework for the ad tech sector to operate within and no adequacy ruling in place, legal departments in UK publishers and advertisers may well feel their exposure is too great and order a halt to activities. The result could be a “digital Dover” with consumer demand piled up outside eco-systems that are in shutdown until some legal clarity emerges.
Just as with Brexit itself, many digital marketers will no doubt want to shrug this off and assume either that it will get worked out in a hurry or that regulators will decide to turn a blind eye. Both of those are possible, but not probable. Without fast-tracking of new contracts and swift action by stakeholders across the digital eco-system, 29/3/19 might turn out to have the impact that was forecast for Y2K.