Oz Watson, Andy Carter MP, Alex Stepney and Filippo Pollara provides a rundown of our latest event on the 5th September on the proposed changes to subscription services in the Digital Markets, Competition and Consumers Bill.
The 2022 Queen’s speech announced that a ‘Digital Markets, Competition and Consumer Bill (DMCCB)’ would be proposed to regulate the market power of digital service providers. The Bill was eventually introduced earlier this year and can be roughly divided into four parts, with Parts 1 and 2 focusing on digital markets and proposed competition law reforms and Parts 3 and 4 focusing on proposed reforms of consumer law enforcement and on new consumer rights.
On Tuesday 5th September, the Media APPG hosted an event chaired by Andy Carter MP in collaboration with international law firm Taylor Wessing to discuss the changes proposed in the new DMCCB with respect to subscription services. MPs, Peers and industry figures arrived in Parliament for a brief period of networking, followed by a lively discussion led by a panel of industry and legal specialists (Alex Stepney, Oz Watson, Filippo Pollara).
After a warm introduction from Andy Carter MP, Oz Watson, Senior Associate in the Technology, IP and Information team at Taylor Wessing, provided a comprehensive overview of the main changes to subscription services proposed in the Bill, including duties to:
- Issue reminder notices to consumers before auto renewal.
- Include a new 14-day renewal cooling-off period.
- Ensure that the cancellation process is straight-forward and achievable in a single communication and by any means.
Oz expressed his appreciation for the premise of the bill, stating “We accept and understand the motivations behind these changes, but the practical implications are the challenge.”
The reoccurring concern with these new requirements shared by all panellists was their potential to (i) damage customer relationships and experience; and (ii) create a disproportionate administrative burden for providers. Alex Stepney, Policy and External Affairs Director, News UK, remarked that she was concerned increased communications would “drive a wedge between providers and consumers”, which would lead to “sending fewer communications about the value of the product because there will be so many renewal reminders… the frequency and detail of which are specified by the legislation.” Several problems follow from this influx of provider communications, including the risk of consumers unsubscribing through irritation. Alex reiterated that “intervening at this level is bad for the consumers and bad for businesses as they have to bring in additional bureaucracy.”
Concerns were also expressed over consumers abusing the cooling-off periods to consume content for free without paying for a subscription. Oz Watson said “lots of providers are relying on subscriptions as a consistent source of revenue so that they can invest in production of high quality content to make available on their platform to draw in new subscribers. Introducing these 14-day free windows potentially opens the door for consumers to view these 'tentpole' pieces of content and then cancel their contract for free, which cuts across the underlying model many of these businesses operate on.” Alex seconded this concern claiming this bill is “further opening providers up to this kind of abuse” which would hamper their ability to invest in high quality investigative journalism.
Filippo Pollara, Senior Public Affairs Advisor, Federation of Small Businesses, shared concern for how smaller companies will adapt to these ‘rigid requirements’ as “small businesses will have to put systems in place to be able to comply, which incurs extra costs.” With increased communications and the potential for misuse of cooling-off periods, it’s entirely possible small businesses will struggle due to increased admin costs and lower subscription rates.
The panel agreed that the provisions are well intentioned, but given the government’s own assessment shows that only 5% of all subscriptions are unwanted, and therefore the level of intervention seems disproportionate. There was a general consensus that further clarification was needed on how to implement these ‘prescriptivist regulations’, and that the government needs to provide more concrete guidelines on how to simplify the cancellation process into a single communication. The discussion suggested the government should put themselves in the position of the average consumer, and address the possibility that there is some regulatory overreach.
The Bill has now moved to Report Stage and is expected be rolled over to the next parliamentary session.