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The Digital Single Market: will pragmatism trump ambition?

The original purpose of the European Union was to encourage trade between Member States by removing barriers and encouraging free movement of goods, services and people.  One area where barriers are perceived to remain is around digital goods and services.  These are now in the sights of the Juncker Presidency, and a central plank of his platform upon taking power in November 2014 was to introduce a "Digital Single Market".

June 2015

On 6 May 2015, the European Commission's (Commission) Digital Single Market (DSM) strategy was announced.  At its core are three 'pillars', which each sound deceptively simple to achieve until you start looking more closely at what is involved:

Better online access for consumers and businesses across Europe:

  • creating cross border e-commerce rules which consumers and businesses can trust: simplifying and harmonising e-commerce rules including creating harmonised EU rules for online purchases of digital content and related rights and remedies as well as increasing cooperation on enforcement. See 'The freedom to shop' for more on this.
  • affordable, high-quality parcel delivery: it sounds like a relatively minor issue but cross-border delivery and return costs are a major disincentive to buy abroad.  The Commission is currently consulting on costs of small parcel delivery and hopes to launch measures to improve price transparency and enhance regulatory oversight of parcel delivery in the first half of 2016;
  • preventing unjustified geo-blocking: geo-blocking is the denial of access to websites in certain countries.  While the Commission recognises that geo-blocking can be justified under certain circumstances, it argues that geo-blocking is a considerable barrier to a single digital market and a cause of consumer dissatisfaction in the EU.  The Commission is intending to propose legislation to prevent "unjustified" geo-blocking in the first half of 2016, and is also launching a competition inquiry into e-commerce. For more, read 'What might a Digital Single Market for content look like?' and 'What is the EC proposing to ensure effective competition in the digital market?';
  • better access to digital content through a modern, more European copyright framework: the Commission is proposing to produce draft legislation by the end of the 2015, which will aim to harmonise copyright law across Europe and allow for wider online access to works by EU users.  This will cover portability of legally acquired copyrightcontent, ensure cross-border access to legally acquired online services; create greater legal certainty for cross-border use of protected content for specific purposes such as academic research; clarify rules on intermediaries; and modernise enforcement rules, concentrating on commercial-scale infringements. The Commission is not intending to change the principle of territoriality of intellectual property rights although it will look at the issue of cross-border access to content (including by expanding the SatCab Directive).  For more on this, see our article, 'What might a Digital Single Market for content look like?';
  • reducing VAT related burdens and obstacles: the Commission will make proposals in 2016, aimed at reducing the complexity of the different VAT systems in the various Member States to create a level playing field and to ensure that VAT revenues accrue to the Member State of the consumer.  It is particularly looking at reducing compliance costs for SMEs.  It will also look at the tax treatment of a variety of e-services including digital books.  See 'VAT and the Digital Single Market' for more;

Creating the right conditions and a level playing field for advanced digital networks and innovative services:

  • making telecoms rules fit for purpose: the first step will be the adoption of the connected continent proposals with regard to net neutrality and roaming but, subsequently, the Commission plans a complete review and overhaul of the telecoms framework focusing on: spectrum policy and management; tackling regulatory inconsistency between Member States; ensuring a level playing field and consistent application of the rules; incentivising investment in high speed broadband; and bringing in a more effective regulatory framework and supervisory body.  Proposals are expected in 2016;
  • overhauling the media regulatory framework: the Commission will review the Audio Visual Media Services Directive, looking particularly at its scope and applicability to market players as well as at rules on protection of minors and advertising:
  • creating a fit-for-purpose regulatory environment for platforms and intermediaries: by the end of 2015, the Commission intends to launch a comprehensive assessment of the role of platforms and online intermediaries which will cover transparency of search results, the way platforms use the information they collect, relations between platforms and suppliers, and issues preventing customers moving between platforms.  The Commission will also be looking at the issue of illegal online content and considering whether further measures are needed in terms of take down procedures and the role of intermediaries. See 'What might a Digital Single Market for content look like?' for more;
  • reinforcing trust and security in digital services and the handling of personal data: once the General Data Protection Regulation has been passed (intended to be by the end of 2015), the Commission will review the e-Privacy Directive.  It will also continue to focus on cyber security and look at establishing a Public-Private partnership in this area which will focus on developing cyber security solutions.  See 'The freedom to shop' for more;

Maximising the growth potential of the digital economy

  • cloud button on keyboardbuilding a data economy: this is an initiative to concentrate on developing big data, cloud services and the Internet of Things.  The Commission will launch a 'Free Flow of Data' initiative in 2016 which will tackle restrictions on the free movement of data other than for data protection reasons, including restrictions on interoperability and portability.  The Commission is also proposing to launch a European Cloud initiative to allow certification, facilitate switching and provide an 'open science cloud';
  • an inclusive e-society: enabling EU citizens and business to benefit from interlinked multi-lingual public services. The Commission will present a new e-Government action plan for 2016-2020, working towards full e-procurement and interoperable e-signatures.

Is the Commission aiming too low or too high, and what is likely to be the outcome?  Juncker and his primary Commissioners involved in the DSM project, Andrus Ansip (VP for the Digital Single Market) and Günther Oettinger (Commissioner for Digital Economy and Society), are aiming for speed but by doing so do they risk a half-baked outcome and for their work to be little more than tinkering rather than the root-and-branch change they claim to want?

Salutary tales abound. The most recent significant EU digital rights legislation, the Copyright / Infosoc Directive of 2001, took effect only after nearly 10 ten years of debate, while the current draft General Data Protection Regulation, published in early 2012, is apparently the most lobbied-over piece of EU legislation ever.  The DSM project seeks to go further than either of these initiatives and to do so within a few months, reforming huge areas of law in sectors as diverse as competition, e-commerce, VAT, copyright and data protection in the face of much sector-specific opposition. Already there are signs that the Commission's plans are being trimmed when they are confronted with their likely impact; Commissioner Oettinger is, for example, reported this week to have offered an olive branch to protect the film and TV industries from the effect of a true single market for content.

umbrellaArmed with an impressive set of statistics attesting to the benefits to the European economy of reducing barriers to a DSM, the Commission has targeted a wide range of areas, rightly recognising that what falls under the 'digital' umbrella continues to grow and develop.  It is perhaps this rate of development which presents the Commission with its greatest challenge: how to effect the changes in time for them to be effective.  This accounts for the tight timescales set out in the DSM strategy with draft legislation to be published this year in many areas.  Even if these targets are met, there is a real risk that by the time new legislation is pushed through, it will no longer be fit for its ambitious purpose.

Of course, the Commission can't just throw its hands up in despair and take the attitude that it is never going to keep legislation up to speed with technology so it might as well not bother; there is a certain logic to trying to reform all relevant areas in a short period of time.  You can't fault the ambition but looking at the magnitude of the task ahead, you can be forgiven for questioning what is likely to be achieved.

Find more content and resources on our Digital Single Market hub.

If you have any questions on this article please contact us.

Mark Owen


Debbie Heywood


Mark and Debbie look at the task the Commission has set itself.

"There is a real risk that by the time new legislation is pushed through, it will no longer be fit for its ambitious purpose."