Tech & Sourcing @ Morgan Lewis

The first half of 2023 was one of the most active six months for legislative and regulatory developments around artificial intelligence (AI). Our colleagues recently noted the European Parliament’s adoption of a draft AI Act as well as the significant activity in the United States related to regulating AI, both at the federal and state level. AI is also increasingly giving rise to data privacy concerns.

We recently wrote about the emerging trend of content moderation outsourcing. In this blog post, we turn our attention to another growing trend: legal process outsourcing.

Open-source software (OSS) representations and warranties are an integral part of the intellectual property (IP) representations and warranties in mergers and acquisitions (M&A) transactions and financings, as M&A transaction documents regularly include requests for a seller to represent and warrant that it has policies in place regarding the use of OSS, has provided such policies to the acquirer or investor, and has not deviated from such policies. These representations and warranties are important, but they are routinely and necessarily backstopped by the due diligence process.

As part of our Spotlight series, we welcome Todd Liao, a partner in our Shanghai office who works with clients on a wide range of complex commercial and financial transactions and legal issues involving China. Todd is a thought leader on issues facing tech firms doing business in China, recently publishing articles on new measures for online advertising in China, data privacy, and key drivers of Asia’s tech scene. We caught up with Todd to discuss data privacy regulations in China and cross-border data transfers.

The UK communications regulator and concurrent competition authority, Ofcom, announced on April 5 its proposal to refer the UK cloud services market to the Competition and Markets Authority (CMA) for further investigation. This coincided with publication of the interim report of Ofcom’s market study of the largest providers of cloud services (referred to by the authority as “hyperscalers”) in the United Kingdom’s £15 billion ($18.7 billion) cloud services market.

As noted in our recent blog posts, The Rise of Next-Gen Business Process Outsourcing and Key Contracting Issues to Consider, the core premise of next-gen business process outsourcing (BPO) includes (1) the leveraging of automation, bots, performance tools, and other technology to transform and optimize workflows and business processes and (2) the implementation of solutions to collect and analyze data to improve user experiences and business outcomes. Next-gen BPO drives the development and implementation of transformative technology and the generation of critical business data. As such, the identification of key intellectual property (IP) and the allocation of IP use and ownership rights invariably becomes a gating issue in contract structuring and negotiations.

The US Federal Trade Commission (FTC) recently proposed expanding its Negative Option Rule to all subscription agreements. Businesses offering subscription services would be required to make it at least as easy for consumers to cancel a subscription service as it is to sign up for it. For example, if a consumer can sign up for a service online, then the consumer must also be able to cancel it online in the same number of steps (and not be required to cancel in person).

Our recent blog post, The Rise of Next-Gen Business Process Outsourcing, highlighted the importance of understanding the exciting opportunities and the challenges of next-gen business process outsourcing (BPO) in order to effectively negotiate contract provisions that maximize the benefits of next-gen BPO and minimize the risks. In this blog, we take a look at a few key issues to consider when developing and negotiating a next-gen BPO contract.

Join us at our Philadelphia office for an interactive discussion on hot topics related to next-generation transactions and outsourcing, followed by a reception with refreshments and opportunities to network with peers.

The UK Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) on December 20, 2022, announced fines totaling £48.65 million ($59 million) on TSB Bank plc (TSB) for operational resiliency failures, after an IT upgrade led to customers being unable to access core banking services.