Digital Content in Saudi Arabia: Investments and Regulations for a Market on the Rise
Gianluca de Feo and Ashleigh Bruce of AX Law explore both newly promulgated and soon to be implemented regulation of digital content in Saudi Arabia, in particular in relation to competition and liability in the sector.
Since the establishment of the Digital Content Council in 2021, Saudi Arabia has provided significant support to the development of a local digital content market by allocating large investments and improving the regulatory framework to stimulate its expansion.
As part of the Kingdom’s Vision 2030, the digital content market is set to grow domestic production and jobs in the sector as well as increasing local content share and revenues in four main verticals: video, audio, electronic games, and digital advertising.
The recent issuance of multiple regulations and laws dedicated to digital content is a testament to Saudi Arabia’s serious commitment to promoting the digital content market.
The pillars of the “Ignite” initiative promoted by the Digital Content Council
In 2022, the Council announced its “Ignite” initiative to create a comprehensive ecosystem that attracts digital content businesses and expands the local content creation market.
The initiative has three pillars:
- encouraging the participation of the private sector and entrepreneurs in the market through a dedicated regulatory framework;
- creating integrated governance in partnership with several government agencies to promote innovation and attract investments; and
- developing a digital content infrastructure.
The initiative immediately attracted the interest of global providers who committed to the creation of secure data lakes for the local storage of all logs and data sources. The Kingdom also launched Wi-Fi 6E technology initiatives to support the next-generation connectivity and communications infrastructure sustaining the digital content market.
Unsurprisingly, the Kingdom has rapidly produced several regulations that sustain the Ignite initiative, especially stimulating competition in the digital content sector and introducing key regulatory requirements for the provision of digital content services.
Regulations promoting competition in the Saudi tech sector
Whilst the Saudi market had been known for being strongly driven by the public hand and dominated by State-owned enterprises, the Kingdom has recently embarked on a journey towards open competition in the market to attract investment and improve the offering to consumers.
As part of this quest for a more competitive market, the Kingdom recently adopted the following competition regulations:
- The draft Competition Regulations for Digital Content Platforms to promote fair competition among digital content platforms, protect users and businesses from unfair and anti-competitive practices, and promote certainty and consistency for all actors engaged in the digital content sector.
- The Network Neutrality Regulations to protect consumer rights to access lawful content, safeguard local content providers’ non-discriminatory access to the market and promote healthy competition and foster digital innovation.
- The Regulations for the Provision of Private Wireless Telecommunication Networks to provide advanced telecommunication services and create appropriate conditions for fair and effective competition in procurement procedures for wireless networks.
Regulations on digital content platforms in Saudi Arabia
In line with the Ignite pillar of creating a dedicated regulatory framework for digital content, the Kingdom adopted the following regulations:
- The Regulations on Accessing Locally Hosted Internet Content to elevate the reliability of local internet services, promote the localisation of internet content, support innovative business models locally, and improve users’ experience of internet services by providing these services with the highest quality.
- The Regulations for Providing Digital Content Platform Services to create an enabling environment for the digital content platform market’s growth in Saudi Arabia and governing providers of video, audio, gaming, and advertising platforms.
The latter principally aim to create regulatory uniformity for digital content platforms in the Kingdom. Notably, the regulations provide for a matrix of regulatory requirements applicable to different digital content platforms, also depending on the number of users accessing them.
The draft Digital Content Safe Harbour Law
As part of the Kingdom’s policies to foster digital transformation, Saudi Arabia issued a draft Digital Content Safe Harbour Law to attract companies hosting and transiting digital content in the Kingdom.
Taking stock of Section 512 of the US Digital Millennium Copyright Act, Article 3 of the EU’s InfoSoc Directive, Article 14 of the EU’s E-Commerce Directive, and Article 17 of the EU’s Copyright Directive, the Kingdom is looking at attracting businesses by lessening their concerns over risks generated by illegal activity carried out by their users.
Safe harbour provisions generally have the aim of sheltering, under certain conditions, online service providers from liability for indirect copyright infringement and other unlawful content on their platforms. A key feature of such provisions is the waiving – for service providers – of any general obligation to monitor content shared on their channels.
"The law clearly states that no obligation should be imposed upon intermediary service providers to monitor the global digital content that they are hosting."
The draft law provides that, subject to specific conditions, intermediary service providers do not incur any civil or penal liability as a result of providing an intermediary service that includes global digital content that violates the Kingdom’s laws.
The Communications, Space, and Technology Commission (CST) may issue notices to take down content and may order the intermediary service provider to remove the unlawful content and take necessary measures to filter the digital content. However, the law clearly states that no obligation should be imposed upon intermediary service providers to monitor the global digital content that they are hosting.
Similar provisions already exist for cloud computing service providers under the Cloud Computing Services Provisioning Regulations, but the scope of application of the draft law would be broader and directly available to digital content platforms intermediary.
The takeaways
Opportunities are numerous as the Saudi Arabian digital content business continues its exponential growth.
With the evolution of the regulatory framework, companies will be emboldened to launch new and better services in the market, benefitting from a regulatory soil that increasingly sustains competition.
To ensure that the new regulatory framework protects businesses rather than jeopardising them, in-house compliance and legal departments must ensure that the relevant procedures are followed and requirements are met.
As the economic transformation continues, we believe that the digital content market will witness exponential growth and diversification. New players will emerge in each of the verticals of audio and video streaming, e-games, and digital advertising, and increasingly articulated commercial deals will empower the digital content sector in the Kingdom.
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