38
2023 Universal registration document
Risk factors and risk management
Risk factors
2
2.1.1.3
The Group's ability to do business and
compete may decline if it is unable to adapt
to the complex and evolving regulatory
framework governing its activities
Description of the risk
The regulatory framework of the Group's platform service,
which is currently available in more than 180 countries
worldwide, is composed of a variety of laws and regulations
relating to the digital sector which apply depending on the
nature of the relevant matters central to its business, including
Internet, content, privacy, data protection, intellectual property,
advertising and marketing, competition, protection of minors,
consumer protection, automatic subscription renewals, credit
card processing, foreign exchange controls, and taxation.
Additionally, the introduction of new products or services or the
expansion of the Group's activities in further jurisdictions may
increase the number of laws and regulations applying to the
Group. These laws and regulations are constantly evolving, and
may be interpreted, applied, created, or amended in a manner
that is inconsistent from country to country and inconsistent
with the Group's current policies and practices, and whose
adaptation could cause the Group to incur additional expenses,
alter its business model, or even harm its business, if occurring
in one of its core markets. Any associated claims, inquiries, or
other government actions, especially if occurring in one of its
core markets, may increase the Group's operating costs,
negatively affect its growth or result in delays or impediments
in its business activities, diversion of management time and
attention, and remedies that harm its business, including fines
or orders that the Group modifies or ceases existing business
practices. Similarly, any change in laws and regulations that
would negatively impact the growth and popularity of the use
of online streaming platforms, of the Internet or other
electronic communications networks could reduce demand for
the Group's service and adversely affect its business, financial
position and operating results.
illegal (for example, infringing content or content of a racist or
denigrating nature or content calling for violence) in the
territory in which it is disseminated, or even be subject to civil
and/or criminal penalties in this respect.
Under French law, audio streaming platform activities are not
currently regulated by any dedicated administrative
authorities and are, in particular, exempt from the content
quota system imposed on radio channel companies and do not
need to obtain any special authorization to enter the market.
The French Autorité de régulation de la communication
audiovisuelle et numérique (ARCOM) is tasked with ensuring
that online platforms cooperate with legal authorities in
moderating and removing illegal online content. In addition,
the European Digital Services Act, which aims to harmonize
regulations applicable to online platforms and social networks,
imposes additional constraints on the Group to ensure the
removal of illegal online content, and the transparency of the
processes put in place through annual public reporting. In
France, "content publishers" (éditeurs) may be held liable for
the content they distribute on the Internet, including as
publishers of illegal content. French case law has not yet ruled
on the qualification of music streaming platforms as content
publishers but according to French scholars, such
a
qualification would likely be retained for streaming platforms
the content of which has been published in accordance with
licenses entered into with right holders, such as Deezer's
platform. The Group could thus be deemed a content publisher
and be required to remove content that could be considered
Given the nature of its activities, the Group is subject to legal
obligations regarding the processing of personal data supplied
by its subscribers that is collected and utilized in the ordinary
course of business, including in connection with providing
personalized playlists to subscribers, running advertising and
marketing campaigns, and calculating royalties. Failure to
comply with these obligations, especially in one of its core
markets, could entail the Group's liability and may result in
significant fines, which could harm the Group's business and
impact its operating results. The Group must comply with the
European regulation on the protection of personal data of
April 27, 2016 known as the "GDPR", as well as the national
data protection laws implementing the GDPR in the EU
Member States where the Company operates – typically, in
France, law n° 78-17 relating to Information Technology, Data
Files and Individual Liberties and its implementing decree. In
addition to the GDPR, the Company and its subsidiaries may
be subject to data protection laws in countries where its
service is provided even when they are not established in such
countries, as a result of the extraterritorial reach of certain
data protection laws. Finally, the implementation of unsolicited
marketing communications using electronic communication
means, as well as the use of cookies and other tracking
technologies for purposes such as content customization and
targeted advertising in relation to the users of its website,
application and/or services, requires the Company to comply
with the provisions of Directive 2002/58/CE relating to the
protection of privacy in electronic communications, as
implemented in the relevant EU Member States ("ePrivacy
Rules"). Such implementation legislation requires, in certain
circumstances, that user consent be obtained before
(i) engaging
in marketing communications using electronic
communication means, and/or (ii) implementing cookies and
other tracking technologies that are not strictly necessary for
the provision of the online service/content requested by the
user. Enforcement by public regulatory authorities in the EU in
respect of GDPR and ePrivacy Rules is increasing and may
limit the Group's ability to collect and use data and could
therefore reduce the perceived value of its service, by
preventing it from providing a customized user interface to its
users, from serving targeted advertisements to users or
prospects, or from effectively calculating royalties owed to
content owners. Any of these events could harm the Group's
business, if occurring in one of its core markets.
The Group is also required to comply with various regulations
protecting literary and artistic property, particularly with
regard to copyright and neighboring rights which protect the
music content and podcasts distributed by it. Copyright
protects all creations of the human mind while neighboring
rights were created for people who are not technically authors:
performing artists, producers of phonograms, and those
involved in radio and television broadcasting. The Group relies
on the protection by copyright for its creations (i.e., proprietary
software, mobile application and databases). In addition, the
reproduction, publication and distribution of music content
and podcasts on the Group platform require prior authorization
from the rights holder and respect of the creators' moral
