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Trends in Information Technology Law: Looking Ahead to 2014

This article looks ahead to what we might expect as IT law developments in 2014. Please see also the PLC service article for 2013 predictions for data protection, privacy, social media, copyright and patents.

“Before long, everything that computes will connect and everything the connects will compute” [1]

This time, the big things in IT next year are reasonably easy to see: Cloud, Big Data, Mobile and Social Media.  Much harder to predict - for enterprises, SMEs, Government and consumers alike - are the first and subsequent generation consequences of how all these things will interact and react with each other:  how, rather than that, everything will all compute and connect together.

And the wild card, oddly enough as we come round from the hangover after the party that ended so abruptly in September 2008, is the stimulus that the return of economic growth gives to all these big, macro IT changes – real GDP growth in the OECD is forecast to double from 1.2% in 2013 to 2.3% in 2014 and 2.7% in 2015 [2].

Much of this GDP growth will be in IT markets, where the pace of reshaping business and commerce brought about the scale and nexus – two key words in this piece last year – of digitisation will only quicken in 2014. Convergence continues to erode boundaries in the new ‘phygital’ (physical/digital) world and the next few years will see disruption to established patterns of business and ways of doing things on a different scale to what has gone before.

Cloud

Trying to spare the weak imagery, the Cloud will continue to mature in 2014.  In a great new book[3], Chris Millard and his colleagues at Queen Mary University of London give an illuminating account of how standard Cloud services contracts – Terms of Service (ToS), Service Level Agreements (SLAs), Acceptable Use Policies (AUPs) and Privacy Policies (PPs) – have evolved between 2010 and 2013, setting the scene for how the various markets for ‘XaaS’ (‘X’ as a service, where ‘X’ is software, platform or infrastructure – or indeed ‘anything’) are likely to develop from here. They also cover negotiated contracts, and the dynamics and patterns of contracting techniques and particular issues for larger corporate deals. Here, the position today is characterised by a genuine expectation gap – taking security (one of the key issues in practice) as an example:

“Our sources indicated many deals have collapsed or ‘not even got to first base’ due to providers’ unwillingness to follow users’ security policies.  One global provider felt that, if so, the user was simply not ready for the cloud”. [4]

The Cloud is still at a relatively early stage of adoption, with many first time users and new providers.  It will expand rapidly in 2014 and many more Cloud contracts will hit lawyers’ desks for review next year.  The market on the supply side is likely to follow the standard pattern with an initial phase of burgeoning supply from many new providers, likely enhanced by the economic upswing, before a slowing of growth heralds the consolidation phase – ultimately, the Cloud is a game for those with the deepest pockets (Amazon, Microsoft, Google, Apple, IBM) and all about global reach and economies of scale.  Going into 2014, it will be a while before the market consolidates and more established contractual practices settle down.  In the meantime, common sense as much as technical skill in contracting will be at a premium.

Data Protection

We’ll all be watching the labyrinthine process of EU law making at work as the Data Protection Regulation – the most lobbied piece of legislation ever on this side of the Atlantic – continues its progress.  At the moment, stumbling blocks in the negotiations include the ‘one-stop shop’, designed to bring savings and simplicity to data controllers and processors by dealing with 1 not 28 regulatory authorities, but opposed by German consumer protection reservations and legal reservations from M. Legal, the DG of the EU Council’s Legal Service; the form of the rules – whether regulation (directly applicable) or directive (needing local law transposition); lower regulatory scrutiny for ‘low risk’ processing; and coming into force date.  Plenty of twists and turns await here in 2014.

Big Data

Competitive advantage through the differentiation by use of IT has moved from hardware to software to data: better and faster use of more and better data helps a company know more about its customers than its competitor.  This is what is primarily driving Big Data. The emphasis is on harnessing input data from multiple sources – public domain, licensed-in data, confidential information, social media or the data that the company creates itself or derives from others’; processing all that data – through third party applications and the company’s own ‘secret source’ algorithms; and outputting the data as processed – for a company-wide single view and company-wide searching, for ‘re-purposing’ and for the sales, marketing, product development, management and finance teams and other business functions.

The main ‘Big Data’ legal question for 2014 is how to carry out all these operations in a programmatic way which is consistent with all the regulatory (data protection or sector specific) contractual (contracts with external suppliers or licensors), copyright and other IP-related legal duties the company owes. Addressing this generally involves a four step process:

first, a risk assessment to establish the types of data the company is using, its sources and their legal wrappers, report back on compliance and remediate any deficiencies;
secondly, getting all stakeholders behind the vision or strategy statement of the company’s goals for Big Data;
thirdly, the policy statement bringing together the people – through steering committee, working party, officers, etc - and the plan – scope, responsibilities, timelines and outputs; and
fourthly, the processes and procedures – which should be proportionate, tied in to HR policies, etc for all staff and supported by awareness training.

The CIO’s and GC’s teams each have key roles to play in corporate Big Data governance. Technical frameworks are emerging to guide organisations in their data governance and management – like TOGAF (The Open Group Architecture Framework) – typically around a set of architectures for their business strategy and organisation; technology infrastructure capabilities (hardware, software and comms); data organisation and modelling (attributes, fields and parameters); and applications (how they map to the organisation’s processes). Whilst this is normally within the bailiwick of the CIO’s team, Legal’s specific Big Data role will be around the risk assessment, policies and procedures, compliance and governance. Judging by activity in 2013, we expect to see more Big Data governance projects in 2014.

Mobile

The number of active mobile phones will exceed 7 billion, the world’s population, next year. It’s in mobile where IT growth is mainly happening – in devices, subscriptions, apps, services and online retail.   The unique combination of mobile’s features – always on, always connected to the Internet and as sensor, camera, QR (Quick Response) code scanner and wallet – fuel deployment of new and innovative applications, and these continue to generate new problems for technology lawyers to solve. As consumers gain confidence in using their mobile to pay for all kinds stuff from all kinds of vendors, their account with their mobile provider starts to look a bit like a bank account, raising complex and detailed issues around electronic money and payment services, for example.  This combination of telecoms, data protection and financial services regulatory issues with contract structuring against the background of a rapidly developing mobile ecosystem will continue to call for lawyers to be able to aggregate black letter law skills quickly and creatively in 2014.

Social Media

In 2013, Facebook hit 1 billion monthly active users (maus); Twitter (whose shares have more than doubled from $26 on IPO on 6 November 2013 500 to $55 at the time of writing) reached 500 million registered users (rus).  Google+ (343maus) and LinkedIn (238 million members) also grew quickly.  2014 will likely see the tipping point when social media strategies become the norm in the corporate world. Examples abound of how organisations are integrating social media into operations in really innovative ways.  In a powerful illustration of the causal relationship between social media and sales, Sony Pictures have started to use analytics derived from social media for their movie release plans as a tool to understand consumer behaviour and adjust their marketing campaigns to enhance sales[5].

Cloud + Big Data + Mobile + Social Media

Although each will have an even bigger impact in 2014, it’s how the Cloud, Big Data, Mobile and Social Media will combine that’s really interesting for next year as each fuels demand for the others. Greater functionality in and cheaper costs of IT via the Cloud mean you can do more for less with more data.  Growing consumer demand for mobile and social media give more uses for data and will increase Cloud processing supply.  It’s not easy to predict where this will be in 2014, let alone in 2019 or 2024. But, for lawyers, the accent will be on anything and everything as a service as these contracts and business patterns evolve increasingly quickly.

As everything computes, mechanisms for everything to connect become critical. These ‘connectors’ include standards (tech specs providing common designs and controlling interoperability), APIs (the ‘hooks and handle’ of Program A that let Program B use Program A’s functions), protocols and processes and will increasingly become legal battlefields as market participants jostle for competitive position [6].

Other ‘everys’ that will be big in 2014

All these big macro developments of course depend on the software that controls the processing – and here ‘everything agile’ fits neatly with everything computing and connecting. Agile development, which has gained real traction in 2013, is the software methodology that’s based on iterative, incremental and adaptive development and in many situations is inherently more flexible than an approach based on prescriptive, detailed planning.

2014 will also be a big step on the road to the ‘Internet of everything’ – processors in your fridge to let you know when the yoghurt’s going off or you’re nearly out of milk; autonomous vehicles; expert systems; virtual helpers and other smart machines.

The ‘quantified self’ movement - using IT to record data about every aspect of an individual’s daily life – will see more of ‘everything about people’ in 2014.  And if The Circle - Dave Eggers’ 2013 novel about TruYou, SeeChange, the debate between privacy and transparency and where everything may get to -  worries you, then Edward Snowden’s revelations, whether or not you approve, are at least a catalyst for another debate for everyone about the boundaries of the state on the threshold of the Cloud and Big Data age as we head into 2014.

For further information, please contact Richard Kemp, Senior Partner & Head of Competition
 

[1] Abhi Ingle, AT&T, FT Innovate Conference, Stanford, December 2013

[2] http://www.oecd.org/economy/outlook/Handout_English.pdf

[3] Cloud Computing Law, Edited by Christopher Millard, Oxford University Press, 2013

[4] At page 93.

[5] http://www.deloitte.com/assets/Dcom-Belgium/Local%20Assets/Documents/EN/Events/Sales%20&%20Marketing%202013/Keynote%2003%20-%20How%20Can%20Social%20Media%20Impact%20Your%20Sales.pdf ; Deloitte Digital – State of the Digital Nation, September 2013: http://www.slideshare.net/vhoong/deloitte-digital-nl-state-of-the-digital-nation-v12-26596411 (slide 20) (link no longer live)

[6] The final act of SAS Institute Inc v World Programming Ltd ([2013] EWCA Civ 1482) took place with the Court of Appeal (CoA) judgment on 7 November 2013, when the CoA upheld the judgment of Arnold J in holding that the defendant had not infringed the rights of the plaintiff on a number of grounds including that copyright did not protect the functionality of programs or programming languages.