The UK has a fantastic opportunity to be an eCommerce hub for Europe but is being threatened by the Information Commissioner’s Office interpretation of EU privacy legislation.
By Michael Ross, director of eCommera
The EU Cookie directive came into effect on 26 May 2011 and was deferred for 12 months but retailers are still unclear as to what needs to be done and also the impact it may have on them. A number of consultancies have offered retailers advice on how to deal with and implement the law, but the most worrying aspect is the economic effect it will have.
The UK has one of the highest online spending per capita in the world, some of the most innovative online businesses and some of the best online talent. The future should be positive but there is significant risk that all of our advantages will be frittered away by needless regulation. We are seeing that regulatory constraints can act as a catalyst for eCommerce start-ups to leave our shores.
Indeed, Amazon, eBay, Skype, Apple, Rakuten – all have operations in Luxembourg. Some of this is clearly for tax benefits, but also the Luxembourg government is very eCommerce friendly and less likely to take action against its domestic businesses than the UK’s Information Commissioner.
In December 2011, the Information Commissioner’s Office issued a blog requiring website owners to make more of an effort to meet the directive, advising them that they “will be checking your site and we will take the necessary steps to ensure that you do work towards compliance.”
The Privacy and Electric Communications Directive
The law is designed to protect consumer privacy, something which is a good thing but it is the way in which this protection is granted which is extremely important, and which is so damaging for UK online businesses.
The law requires that website users be provided with transparent information on how their cookies (the text file organises and stores user browsing information) will be used and then their consent be given in order to store them. European Union member countries were tasked with transposing the law and putting it into effect by 26 May 2011.
At the deadline, only five countries appear to have implemented the directive including the UK. However, enforcement was immediately ‘postponed’ for 12 months by some politicians who understood how pointless and damaging it was.
But despite this admission, the UK Government moved to introduce a law without first understanding how compliance could be achieved. Indeed, the Government’s interpretation of the EU policy is both unnecessarily literal and in many ways extremely difficult to enforce.
UK businesses that adhere to it will become uncompetitive very quickly and the law will very likely encourage some online firms to seek more favourable jurisdictions.
