Report on the IMKR Lecture “Data as Consideration and Other Developments in the German Civil Code’s Contract Law” by Prof. Metzger

On December 4, 2019, for the second IMKR lecture of the winter semester 2019/20, Prof. Rösler welcomed Prof. Dr. Axel Metzger, LL.M. (Harvard) from Humboldt-Universität zu Berlin, where he holds the Chair of Civil Law and Intellectual Property Law. Speaking on the topic “Data as Contractual Consideration,” Prof. Metzger discussed the expected implications of Directive (EU) 2019/770 of the European Parliament and of the Council of May 20, 2019, on certain aspects of contract law relating to the supply of digital content and digital services on German law.

Prof. Metzger began by addressing the significance of the legislative act, which harmonizes key issues of contract law across EU member states regarding the permanent acquisition and temporary provision of digital content and services. The Directive brings about a paradigm shift. On the one hand, the rights and obligations regarding data processing are expanded from the primarily public-law framework of data protection law to include the private-law sphere. On the other hand, Article 3(1) of Directive 2019/770 places equal emphasis on the provision of personal or other data as consideration for services, whereas previously the focus had been primarily on the payment of a fee.

The scope of application under contract law now also extends to offers that purport to be free services. Recitals 14, 24 et seq. of the Directive emphasize in this regard that the protected data must include, in particular, names, email addresses, or photos. By contrast, the Directive does not cover the collection of personal data based on legal obligations or for the contractual functioning and provision of digital content. Whether data collected from passive consumers – such as through cookies – is covered depends on whether a contract is concluded.

Prof. Metzger then advocated for a model in which contracts for data and digital services should be subject to a market-based framework. Consumers already “trade” their data – for example, with Google, Apple, Facebook, Amazon, and Microsoft (GAFAM) – and thereby generate value. With regard to the necessary regulatory framework, information asymmetries in particular must be eliminated, because so far consumers have no reliable way of knowing for what purposes companies are actually using the data and whether it might even be used for artificial intelligence. Building on this, the technical means to revoke consent for data processing must remain available. Consumers should also have access to competition among providers, so that they have choices regarding whether to accept the respective providers’ terms and conditions.

Prof. Metzger then addressed the contractual obligations of the parties and the scope of application of the Directive. Pursuant to Art. 3(10) of Directive 2019/770, it is incumbent upon the Member States to regulate aspects of general contract law. Therefore, it must always be determined whether a contract is formed at all under the respective legal system. If no contract has been concluded, the provisions of Directive 2019/770 do not apply either, given the absence of contractual obligations on the part of consumers.

Prof. Metzger placed particular emphasis on the validity of contracts with minors. While § 107 of the German Civil Code (BGB) stipulates that, until the age of 18, only legally advantageous transactions may be concluded without parental consent, Article 8(1) of the GDPR permits such consent as early as the age of 16. The legal distinction enshrined in German law between acts of disposition and acts creating obligations means that while a minor’s consent to data transfer may be permissible, the disclosure of data – as an act creating an obligation that is not legally advantageous – would be invalid. Regardless of age, there is no enforceable right to the disclosure of data, although in practice numerous terms and conditions require accurate data and there would also be a legitimate interest in doing so. Prof. Metzger then discussed the various consequences of non-performance or breach of contract pursuant to Articles 6–11 and 13 of Directive 2019/770.

During the discussion, Prof. Metzger commented on the options for implementing the Directive. Given the great importance of data and digital services, he advocated for a far-reaching amendment to the German Civil Code (BGB). However, given the tight implementation deadline of July 1, 2021, everything points toward a concise amendment to the BGB through the newly created §§ 327–327t BGB. Otherwise, only minor changes are planned in the law governing service, sales, license, lease, and contract-for-work agreements. In conclusion, Prof. Metzger welcomes the Directive, which is likely to bring about a shift in perception toward the equivalence of data as a means of payment and modernize consumer protection.

Further reading (in German): Metzger, Verträge über digitale Inhalte und Dienstleistungen: Neuer BGB-Vertragstypus oder punktuelle Reform?, JZ 2019, 577. Metzger, Dienst gegen Daten: Ein synallagmatischer Vertrag, AcP 216 (2016), 817. Research group “Data as a Means of Payment” at the Weizenbaum Institute.