Chris writes in detail about some of the European Commission's plans and proposals for the Digital Single Market (DSM), from the standpoint of a leading European e-commerce company. He raises important and sensitive points about what has been achieved so far with the DSM project, and about some of the challenges lying ahead.
The debate about what should be done to build a fully functioning DSM, and how it should be done, will be a continuing one. Opinions will differ - and I have often said that taking the necessary steps to build a DSM in Europe will not be easy.
For everyone - people as well as companies, European as much as non-European - to get the most from new digital opportunities. To promote and develop digital innovation, to build an open and thriving data economy without barriers.
The DSM strategy one year on: the view from a European e-commerce company
Just over a year ago, the European Commission published its ‘Digital Single Market’ (DSM) strategy. It was ground-breaking because, for the first time ever, it made technological modernisation one of the Commission’s top priorities.
After an energetic start, issuing a range of legislative proposals and several further policy initiatives, the Commission is facing two related challenges.
The first is that many policy makers in Brussels and national capitals regard the online space as inherently American.
Unfortunately, many have concluded that because some of the biggest and most powerful internet companies are American, the European interest lies in the defence of older industries disrupted by digital technologies and the business models they enable. Although the DSM is fundamentally more optimistic - Europe should strive to lead, rather than resign itself to defending against, the digital revolution - the old economy worldview is alive and well.
The second is closely related: the new, powerful vice-presidential roles that are supposed to oversee the activities of a number of Commissioners have not yet proved that they can push President Juncker’s vision through the College of Commissioners itself.
Old, silo-based policy making persists. A recent example is the striking difference in how different parts of the Commission interpret the limited liability regime for online platforms. The Commission needs to overcome this old structural problem and drive its progressive agenda more effectively in-house.
However, in the face of such challenges, progress has been made.
The proposed Content Portability Regulation will help reduce consumer frustration about the way territorial licensing of content is implemented in the single market.
Similarly, the proposed Audiovisual Media Services Directive update seems to take a sensible approach to creating fairer competition between traditional broadcasting and newer online services while clarifying the rules and confirming the country of origin principle that underpins the single market.
With two proposals touching on consumer rights, the Commission is essentially offering European internet companies more harmonisation of consumer rules in exchange for the level of consumer protection being raised somewhat. Ironically, because consumer protection is a sacred cow, it is perhaps politically easier for the Commission to offer this deal rather than the alternative win-win: online traders would feel more confident trading cross-border with a harmonised, but lower level of consumer protection, with consumers benefiting more from the greatly increased competition and transparency (and therefore lower prices) that would result.
While the political intention behind the Geo-Blocking Regulation is to tackle “unjustified” restrictions to consumers’ ability to buy cross-border, in reality many such restrictions are in fact justified - notably because online traders fear that selling cross-border will force them to comply with multiple countries’ consumer protection laws.
There are legitimate questions about whether the Commission’s intention to protect traders from this will be followed by the courts - leaving the primary incentive that online traders have for discriminating against consumers in other EU Member States in place.
In the area of competition, online traders hope that DG COMP’s sector inquiry into e-commerce will reveal what they have long known: that brands use a wide array of tricks to prevent their products from being sold online and/or across borders.
Strong action to change the rules on vertical restraints would be pro-internal market, pro-consumer and pro-digital.
It is critically important for the Commission to come out of the current antitrust cases in the online sphere with strong credibility, and a body of enforcement decisions that have precedential value for national competition authorities.
On a less positive note, it’s somewhat unclear what the Commission’s “B2B relations” work stream will achieve beyond what can be done by energetic application of competition rules, without creating barriers to entry for aspiring European platforms like the ones my company operates.
Instead of the ‘duty of care’ mentioned in the DSM strategy, the EU should put in place a “Good Samaritan” principle whereby platforms that put in place proactive measures against illegal content are protected against findings in court that these measures constitute ‘active’ hosting or ‘actual knowledge’ of the illegality of content.
This would create the conditions that European platforms need to scale up, while actually allowing them to increase their efforts against undesirable content.
Lastly, unfortunately the newly adopted but old-fashioned General Data Protection Regulation will prove damaging to the competitiveness of European industry, whether digital or not, and will often offer less privacy for Europeans, not more. The Commission has a chance to limit the damage by getting rid of unclear and unnecessary provisions like the “cookie consent” rule in the upcoming review of the e-Privacy Directive.
To sum up, the Commission has made a promising start, and on balance I feel that the result of the DSM process is likely to be a net positive for Europe.
However, what is needed is a shift from the DSM’s ambition to be “a horizontal policy, covering all sectors of the economy and of the public sector”, to a steely determination to ensure that Europe regulates with a “Digital First” mindset that focuses on the aspirations of Europe’s “Generation D”(igital).