OUTLOOK 2021
Technology, Media and Telecommunications
Data and cyber challenges grow but so does the opportunity
Data, along with cyber security, are topics that were never far from the headlines in 2020. We expect that will continue with ongoing and new challenges for businesses in relation to the data that they hold and the IT systems that they seek to protect. New data protection laws (such as those recently seen in the DIFC, California and Cayman) will continue to emerge around the world and we expect the Biden administration to focus on how to address the privacy gap between the US and the EU as part of its desire to fix US EU relations. It’s likely that regulators (particularly EU) will accelerate enforcement activity with a significant increase in monetary penalties and, alongside that, there will be an increase in claims from individuals with more class actions and no-win-no-fee litigation. Data transfers will stay near the top of the list of difficult problems to solve and there will likely be a lot of work to be done to assess and document arrangements for data transfers outside Europe (including to the UK if no post-Brexit adequacy decision). The implementation of the new forms of Standard Contractual Clauses to cover data transfers outside the EU will add to this challenge. And yet, notwithstanding these challenges, there will remain great competitive advantage to be found in setting and implementing a data strategy and embracing new technology such as AI and sophisticated data analytics. Companies will have to find the right balance between making best use of their data assets and ensuring compliance.
5G and fibre networks key to keeping us connected
If, pre-COVID-19, connectivity was not recognised as critical to our economy and society, it is now. 5G and fibre rollouts are crucial to meeting business and consumer demand for connectivity. Their rollout will continue to be subject to logistical and financial challenges and complexity. However, we expect that in 2021 governments will reach more conclusive views on the balance to strike between national security concerns and speed and cost of 5G rollout. Mobile infrastructure sharing between operators will continue to be key and we will continue to see enterprise rollouts outstripping consumer (in part because of the more novel IoT use cases for 5G for enterprise customers). Fibre penetration varies internationally, so each country has different challenges. However, we expect that there will now be increased impetus generally to develop fibre infrastructure, especially given the demands on broadband as a result of COVID-19. International fibre connectivity through cross-border cable systems is also likely to attract renewed interest from investors looking at long term stable returns.
Longer term impact of COVID-19 lockdowns on enterprise and consumer technology
We are seeing more working models and patterns that work outside of the traditional office. This digitalised workplace brings lots of benefits to business. But alongside those benefits, a reinvigorated focus on risk management. Digital tools are becoming more sophisticated and risk and compliance functions are having to develop their approach alongside these changes. We will see more focus on data and network security. This includes technical solutions to managing risk, but also more training of individuals to deal with even more sophisticated attacks on the network and security of the business. In the consumer space, many people have been pushed into engaging with technology solutions where previously they may have been reluctant - particularly around financial management such as online banking and also entertainment. It’s possible that on a return to some form of normality, a proportion of these people currently using online solutions may revert to physical, location based services, but it seems likely that a significant proportion of these new adopters will maintain their use of online services and technology on a day to day basis.
New technology changing the IP landscape
The accelerated adoption of new tech will define the IP landscape. Industry organisations have already identified a surge in the number of patents filed for AI and blockchain related inventions. Obtaining patents for emerging technologies may be challenging as the subject matter of these inventions could be excluded from patentability. Companies will need to navigate potential objections carefully or consider relying on trade secret protection instead. An increase in technical standards for emerging tech (such as IoT and driverless cars) and patents declared essential to those standards, means that there will be more disputes about FRAND licensing outside the mobile phone and telecom sector. In the meantime, patentees and implementers in the cellular technology space are racing to issue claims in courts that they consider to be favourable, generating more SEP litigation, competing claims and anti-suit injunctions. The EU Commission’s focus is not just on SEP disputes, but increased regulation of online platforms and big tech (to eliminate misinformation and counterfeiting online) and clarifying legislation to promote data access and sharing.
Geopolitical challenges in TMT
2020 has seen the significant impact of geo-political tensions at play between various countries and regions – impacting the TMT sector and its major players. The US-China relationship, of course, has dominated the headlines as the two major technology super-powers have traded trade restriction blows. And the Trump administration imposed measures which have had an impact not just on the ability of Chinese technology companies to trade with the US but also with other regions such as Europe. It remains to be seen whether the Biden administration adopts a different approach with regards to China. We suspect the substance of the restrictions placed on Chinese technology companies will not change in the short to medium term. But the tone of engagement between the US and China may change which may assist longer term resolution. However, geo-political headwinds do not just blow between the US and China. Privacy has become a battleground in relations between the US and the EU with a recent EU court decision criticising US surveillance powers and posing challenges to data transfers to the US. We have also seen a huge increase in foreign direct investment regimes in Europe, seeking to regulate acquisitions of European assets from foreign investors and in particular technology firms. These regimes are not limited to, for example, China nor limited to defence related technology (the sector that was traditionally the focus of FDI restriction regimes). Acquiring parties that are not headquartered in Europe will need to consider these regimes alongside usual merger control analysis across a broad class of assets.