Creating a truly Digital Single Market in Europe
The European Commission’s approach to a single digital market is laudable, but a closer examination of the blueprint may make digital businesses jumpy, writes the IAB’s Nick Stringer.
Recently there have been a few articles and opinion pieces predicting what the outcome of the UK General Election will mean for business, including for digital advertising.
However – as with many of today’s rules and regulations governing the sector – it is the political institutions in Brussels that may determine its future health and that of Europe’s digital economy, per se.
The European Commission has published its Digital Single Market strategy, a ‘roadmap’ of how it can enhance digital goods and services across EU borders and markets. In our ever-increasing digital world such a blueprint is common sense: it will help foster innovation and boost growth and employment.
Digital advertising lies at the heart of this, helping to fund content, services and applications – from search, webmail, social networking and price comparison sites, to productivity suites, blogs/vlogs, video/photo sharing, and the majority of news, information and video / entertainment sites – making them widely available across markets at little or no cost to consumers.
The high-level goals of the European Commission’s approach are laudable:
1. To provide citizens and businesses with better access to digital goods and services across EU markets
2. To create the right environment and conditions for networks and service to flourish
3. To maximise the growth potential of the European digital economy by investing in the necessary infrastructure, including education and skills.
However, a closer examination of the blueprint may make digital businesses jumpy. For example, by the end of the year the European Commission will launch an assessment on ‘online platforms’ (e.g. search engines, social media and e-commerce platforms, app stores and price comparison sites), including their market power and their role in tackling illegal content. The devil will be in the detail.
The blueprint also refers to the much-discussed data protection reforms slowly making their way through Brussels.
There’s still a way to go to put a balanced, proportionate and – most importantly – future-proof new legal framework in place and it remains to be seen as to whether digital businesses – large or small – will have a truly harmonised approach to privacy and data protection in Europe, a cornerstone of any single digital market.
A failure to achieve harmonisation will undermine the aims of the approach and cause digital businesses real headaches. In an opinion piece for the Financial Times last week, Facebook offered a glimpse into a future without effective cross-border cooperation.
To give background, under a principle known as the ‘country of origin’, businesses in Europe meeting the legal requirements of their ‘home country’ – in this case the Ireland – are free to provide their services and goods across all EU markets without restrictions.
Facebook argues that this approach – to be enshrined in the new future data protection law as the ‘One Stop Shop’ mechanism – is being undermined by data protection regulators across Europe. From Belgium to Germany, these authorities use their national jurisdictions to challenge the Irish Data Protection Commissioner on data protection questions that have already been addressed.
The result, Facebook says, is that businesses face the real risk of having to comply with 28 independently shifting national variants, making it “harder to start and run an internet business…and making Europe less prosperous and the web less useful.”
But this issue is not just about global technology giants, such as Facebook. As the article says, “the biggest victims would be smaller European companies.” Smaller digital businesses depend on the ‘country of origin’ principle as they look to grow, scale up and challenge traditional players.
For example: a developer producing games for mobile devices or a new online clothing brand, both expanding their services across EU markets. They will simply lack the resources to assess how to comply with the minutiae of 28 different data protection rules.
The ‘One Stop Shop’ mechanism in the new data protection reforms is a clear commitment to alleviate those concerns. It is the foundation of Europe’s data protection reforms which – in itself – builds the bedrock of a European digital single market.
If one of the European Commission’s aims is to maximise the growth of the European digital economy, it’s important we don’t deny ourselves the next big thing that can help deliver it.
Nick Stringer is director of regulatory affairs at the Internet Advertising Bureau UK // @nickstringer