• Digital Single Market

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    In praise of the European Commission’s digital plans

    If the latest leaked version is a good indication of where things will come out, there are serious grounds for optimism about the Juncker Commission’s Digital Single Market  As a Brussels veteran, it is tempting to lapse into cynicism when confronted [read more]
    byChris Sherwood | 24/Apr/20158 min read
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    If the latest leaked version is a good indication of where things will come out, there are serious grounds for optimism about the Juncker Commission’s Digital Single Market 

    As a Brussels veteran, it is tempting to lapse into cynicism when confronted with a new Commission’s policy programme. Recent Commissions have often re-packaged existing policy initiatives and added generous doses of jargon and waffle, guaranteeing under-delivery.

    But if the latest leaked version is a good indication of where things will come out, there are serious grounds for optimism about the Juncker Commission’s Digital Single Market strategy.

    There are several reasons for this:

    First, the Commission’s starting point is exactly right.

    In striking an optimistic tone that is positive about Europe’s strengths, assets, and potential (“Europe has the assets to succeed in this global digital economy”), the Commission is allowing space for a shift in mind-set for the many decision makers who have been tempted to associate Europe’s digital prospects with doom and gloom.

    It seems to be rejecting the politics of despair and defensive policy options that would simply guarantee Europe’s future as a consumer and importer of foreign digital services and technologies, rather than a producer and exporter – a follower rather than a leader.

    Second, the Commission understands the barriers and challenges.

    There has been a considerable amount of consultation, both formal and informal, and it looks like the Commission understands many of the key barriers to the digitalisation of the European economy.

    It’s very important that the resulting policy initiatives stay focused on achieving the objectives of the DSM, rather than developing some kind of independent existence, or carrying on because they respond to political pressure from one or other interest group.

    Just as importantly, it seems to be clear about the landscape of competing interests and to have an idea of where it wants to come out in terms of some of the big debates.

    In other words, it looks like there is political will to tackle strong opposition from vested interests. It is to be hoped that this level of ambition can be matched by the Member States and the Parliament – no small challenge in a time of such economic uncertainty.

     

    Third, the Commission understands the importance of evidence and problem definitions.

    It’s too often been the case that the Commission has brought together stakeholders to discuss and find solutions to “problems” that are not clearly identified or proven.

    This strategy has a welcome emphasis on tackling actual, rather than perceived, problems. It’s good to see that on some of the vaguer concepts like “platform regulation”, it is intending to deepen its understanding of the problems by consulting, and indeed via a sector enquiry.

    This is obviously the direction that policy making must take. But it will not only be challenging for the policy makers. It will be just as tough for industry and civil society, which have relied on silver-tongued lobbyists in Brussels for decades.

     

    Fourth, the Commission wants to integrate enforcement of existing rules with the development of new ones.

    The launch of the DSM is an early test of the effectiveness of the new Commission structure and working method. Many of the key drivers in the policy debate on the DSM relate to competition and consumer protection.

    In deliberately launching both open consultations and formal tools like the proposed e-commerce sector enquiry – policy responsibilities that are held by different Directorates-General, the Commission seems to be delivering on its promise to improve coordination in policy making. The debate on “platform regulation” is the best example.

    Although there is considerable political pressure from Paris, Berlin, and Madrid to “do something” about “GAFA” (the playful French acronym for Google, Amazon, Facebook, and Apple), the Commission is rightly giving itself the chance to prove its executive and enforcement credentials, notably in the antitrust area.

    Apart from the crucial tests that the Google cases constitute, DG COMP will be given an important opportunity to reinforce its position as the world’s leading antitrust regulator through the launch of a sector enquiry on e-commerce.

    This position is one of the biggest achievements of the European Union writ large, and without it, the European project would lose a significant amount of respect among Europeans.

    And of course, it’s very important to develop strong ex post enforcement capabilities if the Commission is serious about becoming a modern and digital-friendly government institution. This is because digital markets are so fast-moving that traditional, long-winded legislative processes will no longer be adequate to regulate with.

     

    Recommendations

    1. As noted above, the Commission’s starting point is excellent. However, it could go even further and embrace the concept of digital disruption and the value it provides, while noting some of the attendant challenges. The primary source of opposition to a pro-digital agenda like the DSM will come from disrupted industries, and it is important for the Commission to nail its colours to the mast from the start by laying down a challenge to them to modernise.

    2. As it prepares a final version of the DSM strategy, we would urge the Commission to consider being explicit about which anti-competitive or anti-digital practices it is targeting, where these have been identified. One example would be some of the specific ways that big brands segment the Internal Market along national lines in order to control prices, to the detriment of SMEs, competition, consumer welfare, and the potential of the DSM. This is not to say that the Commission has to spell out all of its policy plans in detail, especially where these are not yet fully formed or where the evidence base is still missing (e.g. platform regulation). However, where the targets are already clearly defined, the pressure exerted by publicly “outing” them will go a long way. Another excellent reason to take this approach is that it will contribute to a more straight-talking tone. This is preferable to the usual euro-speak because it sounds more honest and dynamic, and because it’s obviously more measurable.

    3. It would also be helpful to couple the regulatory agenda with a more explicit de-regulatory push. This is certainly present in the leaked draft, but could be emphasised more clearly. The benefit of emphasising the de-regulatory agenda is that it will provide the carrot that some industry actors need in order to engage more constructively than they might otherwise. Good examples that can be more explicitly enumerated could include the ePrivacy Directive and other rules that apply to the telecoms sector (on SMS, for example, since that will soon be completely overtaken by other messaging services), or aspects of the Audiovisual Media Services Directive, which also contains outdated provisions.

    4. Linked to this is the need to take a much closer look at legislative initiatives that are already underway. In particular, versions of the Data Protection Regulation, the Network and Information Security Directive, and the Payments Services Directive being debated by the Parliament or the Council each contain provisions that could seriously undermine the objectives of the DSM. These could be addressed by carrying out impact assessments of texts adopted by one or both legislative institutions.

    5. When promoting an investment agenda, the Commission would do well to ensure that investment is promoted up and down the value chain, and not just in infrastructure. This is important because applications and services drive the demand for capacity that is capable of raising consumers’ willingness to pay for Internet access. Too often, telecoms companies have been allowed to get away unchallenged with passing the message that net neutrality is somehow inimical to investment in infrastructure, when the opposite is likely to be the case.

    photo credits:Howard Ignatius 
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