The EU has confirmed agreement on its proposal for a directive on contracts for the supply of digital content and services (“the Digital Content Directive”). This covers a whole range of digital media – from streamed and downloaded music and movies to apps, games, computer programmes and cloud services.
The key elements of the Digital Content Directive are as follows.
- Fit for purpose. Digital content and services must be fit for their purpose, and be of the quantity, quality and have the performance features usual for that type of digital content or service, and which a consumer may reasonably expect.
- Remedies for lack of conformity. If digital content or services do not conform to required standards, a consumer can opt to have them brought into conformity, receive a proportionate reduction in price or, if the lack of conformity is not minor, opt for termination and reimbursement (the burden of proof for showing it is minor is on the supplier).
- Minimum legal guarantee. For one-off supplies (e.g. downloads) the guarantee period cannot be shorter than two years and for continuous supplies (e.g. contract streaming services) it must apply throughout the contract. If a defect materialises within the first year, there is a presumption that it existed at the point of supply, and the burden to disprove that presumption sits with the supplier.
- Updates and modifications. Businesses must provide consumers with updates throughout the contract period for continuous supplies of digital content/services and for a period of time that the consumer can reasonably expect, given the type of content or service, for one-off supplies. Modifications to continuous supplies must be made at no cost to the consumer, with reasonable notice, and allow the consumer to retain the original service or terminate free of charge.
The Digital Content Directive establishes the first EU-wide rules for contracts with consumers for the supply of digital content and services. The focus is on harmonisation, and the draft includes a general prohibition on Member States introducing more or less stringent requirements. For some time, there have been questions about the extent to which European product rules apply to software; now, the Digital Content Directive has answered some of these.
The EU thinks that this is an issue worth addressing because of the significant growth in the profitability of digital content associated with electronic products. As Rapporteur Evelyne Gebhardt explained: “with the sinking cost of electronic gadgets and the growing market for Big Data and targeted marketing, companies have an increased incentive to distribute consumer electronics without charge. Some consumer electronics are sold at the manufacturing price or less. The main purpose of such ‘giveaways’ is to monetize through collection of user-generated content.”
It is not just digital content and services that are in the EU’s crosshairs, however. The Digital Content Directive is part of the EU’s Digital Single Market project, aimed at facilitating wider digital transformation across the Union. As part of this, the EU will also have a new directive on the sale of goods, which will govern products including those with embedded digital elements such as “smart” household devices or connected watches. We reported on these proposals early last year and now a provisional agreement has been reached, so we will be blogging with further details soon.