My Lords, I am also grateful to the noble Lord, Lord Haskel, for his amendment and for standing in for the noble Lord, Lord Sugar. I look forward to his appearance on the Lord Sugar show.
I recognise that some types of digital content, such as software and games, do, in the words of the noble Lord, Lord Haskel, evolve over time. That is precisely why we introduced Clause 40, allowing updates that were in the terms of the contract. So let me reassure noble Lords that there is nothing in the Bill that prevents digital content traders from providing updates or upgrades, under the terms of their contract, to improve the functionality of the digital content. We have heard several times from the noble Lord, Lord Knight, about the iterative nature of some digital content and I am grateful for his digitally aware intervention.
Clause 40 ensures that, as long as modifications are allowed under the terms of the contract, there is nothing to prevent the trader from updating or upgrading digital content as long as it remains of satisfactory quality, fit for any particular purpose and as described. Such contract terms would be assessable for fairness under Part 2, “Unfair Terms”. The “as described” aspect does not fix the digital content to a static description. The digital content has to match the description but this does not mean it has to be exactly the same as the original description. It simply means that if the digital content is described as containing a certain feature then it should have that feature. However, as long as it has the described features, any additional features would not prevent it from matching, rather as a blouse may match a jacket, although the jacket may have more colours.
To a large degree, the description is in the gift of the trader, as long as it includes the main characteristics of the digital content, its functionality and interoperability. I have heard the industry’s concerns that it needs to be able to provide updates that are made for the consumer’s benefit. Perhaps a feature is taking up too much processing power and slowing everything else down, or perhaps a feature has become vulnerable to a security threat and needs to be removed while it is fixed, to protect the consumer from the threat. Of course it is important that industry is able to act in these cases but I am not convinced by arguments that Clause 40 will prevent it from doing so or slow it down in cases of urgent updates.
Let us assume that a trader has needed to remove a feature of some digital content, either intending to improve functionality or protect from a security threat. What would the trader do next? They would have two options. They could repair the feature to make it work more efficiently or improve security, and then reinstate it. Or they could take a decision that it was a minor feature that not enough consumers used, so they would not reinstate it. If, in that scenario, the removal of the feature meant that the digital content no longer matched the description, as required by Clause 40, the first remedy available to the consumer would be the repair or replacement of the digital content.
In the first option I have just outlined, that is normal industry practice already and is appropriate. A consumer has bought some digital content expecting it to contain the features or perform the functions it was described as doing. If the digital content no longer does that they will be justifiably unhappy and will expect the problem to be fixed. In the second option, where the trader is not repairing or replacing the feature, the consumer would be entitled to some money back. Let us remember that the amount due is unlikely to be the full price paid. It would be an appropriate amount and we would expect this to take into account the use the consumer had already had of the digital content and the continued functionality of the rest of the digital content. So the amount might be small.
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The industry has told us that it would remove only little-used features, so it may not have to compensate all consumers if consumers are not even aware that a feature has been removed and are therefore not inconvenienced. The compensation of consumers does not prevent the trader from making the update; it just becomes part of its commercial decision as to whether or not the right thing to do is to repair the feature. Again, this is appropriate. If a consumer is deprived of a feature they expected the digital content to contain and that feature is not reinstated in some way, it is appropriate that they should be compensated. Of course, it is also open to the trader, under Clause 36(4), to agree to a change to the information provided about the digital content with the consumer, which may be appropriate in some cases.
Again I have concerns that the implication of the amendment would be to limit consumer protection. For example, paragraph (b) of the amendment, “remedy issues or risks”, may include almost any type of modification, including those which are not in the consumer’s interest. Even if a trader asserts that a modification is to the benefit of consumers, how would that be assessed? Last year, a very well known software manufacturer updated its suite of office products to refresh the layout and add new features. At the same time, the update removed some other features that may not have been used by the majority, but which were much loved by a minority of “super users”. The update may or may not have breached Clause 40. That would depend on whether the quality rights were met. However, let us imagine the scenario where the features removed were included in the description of the product. Under the noble Lord’s amendment, the software manufacturer could argue that the update was to the
benefit of consumers, but it clearly was not to the benefit of the users who lost functionality and the features on which they relied. The manufacturer could otherwise simply argue that the update remedied issues.
I am concerned that the perverse effect of the amendment would be to allow traders the opportunity to change digital content post sale through an update and not provide consumers with a remedy if the result of the update is that the consumer no longer has the digital content that was described when they bought it—I think back to the iPad of the noble Baroness, Lady King. I therefore hope that the noble Lord understands these concerns and feels prepared to withdraw the amendment.