How Europe’s Digital Single market could rock the economy
“This content/service is not available in your region” is a sentence that is probably going to be displayed rarer in the close future. The principles of the European single market are currently being extended to the digital economy. Learn here, what you have to know about the digital single market!
The single market is the economic foundation the European Union is built on. While existing rules worked fine for decades, the digital revolution requires policy makers not only to make them fit for future challenges, but also to find long overdue solutions for market distortions. Since 2015, the Digital Single Market Strategy tackles the burning issues.
Today we take it for granted, but there was a time before the barriers of the EU’s single market fell. Now we as customers can easily and freely cross national borders for vacation, to work or to purchase goods and services – without having to worry about taxes or customs. The same is true for businesses. Every company can – regardless of national borders – find the best contractors within the Union. The European single market is reality since 1993. It continues to increase competition and promote intra-European trade and foreign direct investment. According to the Commission, millions of jobs and additional 800 Billion Euros of wealth were due to the merged and more liberal markets created.
Because of the excessive growth in online trade, big parts of the economic volume now are generated online. To some, an according change of the Unions legislation is long overdue. With a more integrated single market, which also includes the EU’s digital economy, the European Commission expects an additional annual contribution of 415 billion Euros, hundreds of thousands of new jobs and more innovation.
Since May 2015, the commission pursues a Digital Single Market Strategy, based on three pillars:
- Better access for consumers and businesses to digital goods and services across Europe
- Creating the right conditions and a level playing field for digital networks and innovative services to flourish
- Maximising the growth potential of the digital economy.
Mid-term enthusiasm
Two years later, the mid-term review of the programme already sounded quite enthusiastic. Next to the abolition of mobile roaming fees in 2017, the Commission announced a variety of other measures that are planned to be implemented before 2020. Some of those concern measures for privacy in online communication, the comprehensive use of a European 5G-network or the abolition of geo-blocking of online digital content, such as films, sports broadcasts or e-book subscriptions in the EU.
Commissioner Mariya Gabriel, in charge of the Digital Economy and Society commented: “Ending unfair geoblocking is a great step forward for consumers and the building of a real Digital Single market working for all. Along with the end of roaming charges and portability, EU citizens will be able to buy their new furniture online, book hotel rooms or use their credit card across borders, like at home.”
Overshooting targets?
While most experts are pleased with the general intention of incorporating the digital economy into European integration and acknowledge what has been accomplished in two years, some criticise the commission for imposing too many restrictions on new technologies.
In a comment, policy-analyst Nick Wallace names the General Data Protection Regulation (GDPR) as a case in point, particularly concerning artificial intelligence (AI). Besides fulfilling a need for data protection rules, it would also impose unnecessary restrictions on emerging technologies. The “right to explanation” is supposed to prevent companies from palming off responsibilities for decisions on computer software. Instead of that, it would just “impose pointless costs on those that use AI responsibly.” According to Wallace, the regulation would not address any conflict between member state regulations, but is a completely novel and expensive concept.
Another and even more severe point of criticism is, that the Commission’s wish to ban the use of geo-blocking for regional price differentiation as well would overshoot the target. Uniform pricing for digital goods and e-commerce would align the prices Union-wide without taking huge differences in purchasing power parity into account. For wealthy member states, such as Austria, prices would fall, while customers in Eastern Europe would have to accept a large rise in prices for online purchases.
The critics have been heard
In November 2017, half a year after the mid-term review, the European Parliament, the Council and the Commission reached a political agreement about geo-blocking. It appears that the critics have been heard. Barriers for the sale of goods without physical delivery, electronically supplied services and services provided in a specific physical location (e.g. booking a holiday resort) will be abolished by the end of 2018. However, the regulation does not harmonise prices or impose an obligation to sell.
Abolishing roaming fees is the best result of the Digital Single Market Strategy
“For citizens this means they will be able to buy their new electrical goods online, rent a car or get their concert tickets across borders as they do at home. It will ensure that they no longer face barriers such as being asked to pay with a debit or credit card issued in another country. For businesses, this means more legal certainty to operate cross-border,” said Jean-Claude Juncker, President of the Commission, well aware that including the digital aspect is a necessary and important step towards exploiting the full potential of the European single market. Nevertheless, digital policy is a rather new field and lacks a commonly agreed frame of reference. In order to stay competitive in a global economy, it is crucial to act fast. Nevertheless, policy makers should be careful not to shoot from the hip.