European Digital Single Market Proposal: SIIA’s Take

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Today, EU Ambassador to the United States, David O’Sullivan, participated in an Atlantic Council event on “Breaking Down Digital Barriers: Turning Transatlantic Challenge into Opportunity.” The event commemorated the Commission’s formal release of its Digital Single Market (DSM) strategy.

From SIIA’s perspective, the intent behind the DSM proposal is praiseworthy. It is undoubtedly true that U.S. firms benefit from European integration. We also share the Commission’s optimism about the potential for digital economic growth. The Commission says that breaking down digital barriers could increase EU GDP by Euros 415 billion. This is a large and meaningful number.

Ambassador O’Sullivan emphasized three important aspects of the DSM strategy. First, he offered reassurances that the goal behind DSM is not protectionist. Second, he noted that the unveiling of the strategy is just the first step in a “long journey.” Third, he very rightly pointed out that the “devil,” or if all goes well, “God” is in the details.

It is too early to say whether the DSM strategy will have protectionist or national champion inducing effects. SIIA is reassured by Ambassador O’Sullivan’s remarks. We note, however, that American tech sector concern is not unfounded. For instance, on February 14, 2015 Commission Gunther Oettinger delivered a speech in which he said the following.

A great challenge is also Europe's position in the development of the next digital platforms that will gradually replace the current Internet and mobile platforms. We have so far missed many opportunities in this field and our online businesses are today dependent on a few non-EU players world-wide: this must not be the case again in the future.

One could be forgiven then for suspecting that the eleventh element of the DSM strategy – the analysis of the role of online platforms- could have as its ultimate aim the displacement of successful U.S. firms in this space.

SIIA agrees with Carl Bildt when he argues that the “EU should resist the urge to rig the rules of cyber space.” This means, for instance, that public policies or enforcement actions should not be configured to disadvantage non-EU companies.

Sometimes companies achieve tremendous success because they are, in fact, competitive. After all, as Bildt points out: “Today, close to half of the world’s rapidly growing mobile traffic flows through network equipment provided by just one European supplier — Ericsson. If foreign governments had objected to its lustrous success, Europeans would surely have been quick to cry foul.”

So we will be watching carefully to see how the DSM strategy affects legitimate international competition. And while it is equally legitimate for countries to have different rules for, for example, privacy, we will also be conducting our own analysis regarding how those rules affect cross-border competition in practice.

With respect to the “long journey” outlined by Ambassador O’Sullivan, we recognize that it really will be a long journey. The sixteen proposals outlined by the Commission have different vehicles (legislation, inquiries, consultations, reviews etc.) to achieve their intended results. They also have different timelines. We believe, however, that over time this strategy will yield outcomes, which is why we are taking it seriously. We welcome, therefore, the Ambassador’s outstretched hand for stakeholders, including U.S. firms, to participate in providing comments on the proposals as more detail is furnished.

With respect to substance, some of the proposals such as rules to make e-commerce easier, more efficient parcel delivery, more enforcement against commercial-scale infringements of intellectual property rights, European free flows of data (as long as this does not turn into an enclosed island of data flows), and skills development make intrinsic sense. We have questions and comments about other proposals. We look forward to working with our European partners to craft the best possible outcomes for European and American consumers and businesses.

For instance, in 2014, SIIA released a White Paper on “Geolocation Tools and Geographical Market Segmentation.” See:

There are many legitimate reasons for why companies, even in a unified market like the United States, might want to engage in geoblocking. Our concern is that the Commission’s view of “unjustified geoblocking” is potentially too narrow. We call upon the Commission to move very carefully in this area.   Our hope is that SIIA’s White Paper and other contributions will incentivize the Commission to develop a narrow and well-thought out rule on this topic, if indeed a rule is really necessary in the first place.

Likewise, with respect to text and data mining, our hope is that our submission to the European Commission’s 2014 Copyright consultation will be useful. We believe that different licensing models and contractual freedom are crucial for the development of this sector. So we urge the Commission to prioritize market-driven solutions to stimulate more text and data mining in Europe.  We encourage the Commission to continue to work with the International Association of STM Publishers (STM) on STM’s text and data mining initiative. We also point to the cross-ref initiative on text and data mining.

The “Free Flow of data Initiative” could be a good proposal, but we think it possibly too limited. The Communication contains a reference to developing a promising “ambitious digital trade and investment policy.” The free flow initiative should be linked to this trade and investment policy. In this context, we also think it would be helpful if the details surrounding the “European Cloud” concept are made explicitly clear that this is not a mechanism to shut out foreign companies from the European market.

So: Let the “Long Journey” begin. And may we find “God” in the details!

Carl Carl Schonander is Senior Vice President for Global Public Policy.