EU Digital Content and Digital Services Directives: Conformity and Remedies

Introduction

Directive (EU) 2019/770 (the Digital Content Directive, DCD) and Directive (EU) 2019/771 (the Sale of Goods Directive, SGD) represent the most significant reform of EU consumer sales law since the Consumer Sales Directive (1999/44/EC). Adopted as part of the New Deal for Consumers and the Digital Single Market strategy, the twin directives address the growing divergence between rules for tangible goods and those for digital content and services, ensuring that consumers benefit from coherent remedies regardless of how a product is delivered. Both directives required transposition by 1 July 2021 and apply from 1 January 2022.

Scope and Applicability of the DCD (2019/770)

The DCD applies to contracts where a trader supplies or undertakes to supply digital content or a digital service to a consumer, and the consumer provides or undertakes to provide personal data (including where data is the “counter-performance”). This extends consumer protection to the data-for-access model characteristic of “free” online platforms. The directive defines digital content as data produced and supplied in digital form (software, apps, digital files, e-books), and digital service as a service allowing the consumer to create, process, store, or access data in digital form (cloud services, social media, streaming platforms).

Excluded from scope are: (a) digital content incorporated into goods (smart appliances) where the digital content operates as an accessory to the good — these fall under the SGD; (b) telecommunications services and electronic communications services; (c) healthcare and gambling services; (d) public services; and (e) contracts where the consumer’s personal data is processed solely for the purpose of supplying the digital content or to meet legal requirements.

Conformity Requirements

Article 7 DCD establishes subjective conformity criteria: the digital content must correspond to the contract description, possess the qualities specified in the pre-contractual information (including functionality, compatibility, interoperability, and accessibility), and be fit for the particular purpose intended by the consumer (where agreed). Article 8 establishes objective conformity criteria: the digital content must be fit for the purposes for which digital content of the same description would normally be used, correspond to the quality and performance which the consumer may reasonably expect (given the nature and public statements by the trader or on its behalf), and be supplied with any accessories and instructions.

Article 9 addresses incorrect integration — where digital content is supplied in digital form or integrated into the consumer’s digital environment — holding the trader liable for lack of conformity resulting from incorrect integration by the consumer, where the integration was performed on the trader’s behalf or the incorrect integration resulted from deficiencies in the integration instructions.

Remedies Under the DCD

Where digital content fails to conform, the consumer is entitled to remedies in a hierarchical order: (a) bringing into conformity (repair or replacement), unless impossible or disproportionate (Article 14); (b) price reduction (Article 16), proportionate to the difference between the actual value and the value it would have had if conforming; (c) termination of the contract (Article 15), where the defect is not minor, the trader has failed to bring into conformity, or the defect is so serious as to justify immediate termination.

The right to termination is more expansive in the DCD than in traditional goods regimes: where the contract provides for continuous supply over time (a cloud subscription), the consumer may terminate only for lack of conformity that is not minor, but where the contract provides for a single supply (one-off download), any non-conformity entitles termination. On termination, the trader must stop using the consumer’s personal data (subject to exceptions) and may not use any content provided by the consumer (Article 16(3)–(4), reflecting the GDPR interface).

Scope and Applicability of the SGD (2019/771)

The SGD applies to contracts for the sale of goods, including goods with digital elements (smart devices) where the digital content or digital service is incorporated or interconnected with the good and provided with it under the contract. The SGD extends the conformity period to two years (Article 10(1)), during which the trader bears the burden of proving that lack of conformity existed at the time of delivery (reverse burden for the first year, or two years where Member States so provide).

Remedies Under the SGD

The SGD establishes a tiered remedy structure: (a) repair or replacement (primary remedies, at the trader’s choice unless one is disproportionate); (b) price reduction; (c) termination (available where repair or replacement is impossible, disproportionate, or has not been completed within a reasonable time or without significant inconvenience to the consumer).

Commercial guarantees under Article 17 are binding on the guarantor and must be set out in clear, intelligible language. The directive also harmonises the limitation periods for exercising remedies: Member States must ensure a limitation period of at least three years from the time the right to a remedy accrues (Article 10(4)).

Digital Content Modification

Article 19 DCD introduces a novel provision on modification of digital content. Where the contract provides for continuous supply, the trader may modify the digital content beyond what is necessary to maintain conformity only if: (a) the contract permits modification with a valid reason; (b) the consumer is notified in advance, on a durable medium, of the modification, its features, and the consumer’s right to terminate; and (c) the consumer is provided with a reasonable period of at least 30 days to terminate without charge.

Where modification negatively affects the consumer’s access or use, the consumer may terminate the contract unless the negative impact is minimal. This provision addresses the dynamic nature of digital products — software updates, feature changes, and algorithmic modifications — ensuring that consumers are not locked into fundamentally altered services.

Limitation Periods

The DCD (Article 11) requires Member States to ensure that the trader is held liable for any lack of conformity within the relevant limitation period under national law. The two-year period from the time of delivery applies for the trader’s liability; the consumer must notify the trader within two months of discovery in some Member States, though the directive allows the consumer to exercise remedies at any time within the limitation period.

The Interface with the CRD

The DCD and SGD operate alongside the Consumer Rights Directive (2011/83/EU). The CRD governs pre-contractual information and the right of withdrawal, while the DCD and SGD govern conformity and remedies for the post-contractual phase. Where a consumer purchases a smart device online, the CRD provides withdrawal rights, the SGD governs the physical good and embedded digital elements, and the DCD applies to any separately supplied digital content. This layered framework, while comprehensive, creates coordination challenges where digital and physical elements are inextricably linked.