• A conversation with

    Kaja Kallas: How the emerging app economy can make Europe stronger

     If we want the European digital sector to thrive we should focus more on promoting a cultural change than on regulatory intervention, argues MEP Kaja Kallas.   What should be the right regulatory conditions to help the European digital comp [read more]
    byThe Digital Post | 02/Apr/20157 min read
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     If we want the European digital sector to thrive we should focus more on promoting a cultural change than on regulatory intervention, argues MEP Kaja Kallas.

     

    Kallas

    What should be the right regulatory conditions to help the European digital companies emerge and become global leaders?

    I feel that very often less is more. If we think about all the possibilities we have today and all the new business models that have emerged, then we should keep in mind that these have been created in a rather innovation-friendly regulatory framework   in that field.  We should therefore be very careful before introducing new regulations.

    What we should however promoting is a change in the way we treat failure in Europe – not through regulation but through   cultural change- failure is not a bad thing, it shows that at least you tried. If more people are not afraid to fail, then more people will be encouraged to start something new.

    The growth of the app economy is certainly creating jobs. However, in the eyes of its critics it may, by disrupting traditional business models, be also destroying jobs. How would you respond to these concerns?

    Daron Acemoglu and James Robinson have written a very good book called “Why nations fail?” In that book they show through different historical examples   how people have always tried to protect the traditional sectors whereas in order to be successful you should embrace creative destruction.

    It means that yes, old jobs will disappear, but new jobs will emerge. You can fight against the knitting machine but if it has already been invented, it will come sooner or later and the craftsmen will have to find new jobs.

     

    How the European Union should address the “threats” the app economy poses on trust and security?

    Trust and security are important pillars of the internet economy; service providers have understood this as trust is at the heart of their business model which means that the market already regulates this to some extent. However, from the policy makers side we have to ensure that the right framework is in place for people to trust service providers with their data.

    This means that it must be clear that the person is owner of his or her own data and he/ she can decide who can access and use this data.

    In November you voiced skepticism about the European Parliament’s resolution requiring the unbundling of search engines. Why going down this way is a bad idea?

    I think the debate was on wrong grounds – it was about one company in particular. My statement was that it is wrong for the parliament to start intervening in the investigation procedures that the Commission is already conducting.

    The Commission has the right to demand unbundling if it finds that the search engine is an essential facility and abuses its dominant position.

    The Commission has the tools to deal with this and the Parliament should not make it political.

     

    How do you see the debate about the so-called principle of “platform neutrality”?

    It is a very wide question. In general it seems to me that there is a push from some stakeholders to shift the discussion from net neutrality to platform neutrality that would only be applicable to one US Company. I do not think this is right as we might end up harming our European companies even more.

    There are many layers to this discussion. First, the use of one platform does not necessarily preclude the use of another similar platform. If one is more user-friendly than the other one, people will change from one to another, as the switching costs are often quite low.

    In addition, due to low barriers to entry and the limited cost of creating internet platforms, new ones can emerge   quickly.

    On the other hand, some platforms might have network effects that can make market entry more difficult for the newcomers.

    Thirdly, many of the business models of internet platforms are built on unneutrality.

     

     photo credits: Johan Larsson
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