Digitization has been a boon to the European economy. However, the Digital Single Market remains an aspiration rather than a reality, and European institutions and Member-State governments have to redouble their efforts in the next years to create better and larger space for the digital economy to grow. Even if there is a great deal of variation between the performance of different EU economies, the EU is trailing behind many other economies and could increase the economic outcome of digitzation. In this paper, we have focused on defining economic concern about the digital performance of Europe and outlining conceptual problems in work to create a Digital Single Market.
There are especially three conceptual problems. First, many of the policy factors that hold Europe’s digital performance back are not data or DSM specific. They are about the general conditions for entrepreneurs to do business across the border in Europe and build business models that include many national markets but don’t run into high regulatory barriers and costs. In the past five years, reforms under the DSM label have much been focused at digital-specific regulations, and – unfortunately – several of these efforts have added new layers of regulatory complication to data-based commerce in Europe. For the future, a real ambition to improve the speed of digitization and its economic outcomes will have to be combined with general single-market policies that knock down barriers between EU countries. Second, many of the regulations on data should be changed to give clarity rather than confusion and add more opportunities for experimentation and innovation. Third, the EU is in need of greater coordination of various data-regulations and there should be a clearer taxonomy of the specific ambitions of one regulation to avoid clashes with other regulations.
Where do we come from – and where do we go next?
The EU’s digital single market (DSM) strategy was launched in 2015 as a part of the Europe 2020 project, following up on the Lisbon Strategy’s objective to become the “most dynamic and competitive knowledge-based economy in the world by 2010”. The aim of the DSM strategy is to create an area where businesses and consumers have unrestricted access to digital goods and services all over Europe, with the free flow of data and an environment that allows for both competition and innovation, and where the digital economy can grow faster and create a bigger economic payoff.
The DSM strategy comprises 3 main pillars:
- Access: better access for consumers and businesses to digital goods and services across Europe.
- Environment: creating the right conditions and a level playing field for digital networks and innovative services to flourish.
- Economy & Society: maximising the growth potential of the digital economy.
Overall, the policy areas to which the DSM strategy applies have been varied, stretching from data and data security, the content of websites and associated copyright issues, as well as online cross-border trade, matters of mobile and broadband infrastructure, and e-government.
The DSM strategy has also promoted digitization through a set of support mechanisms such as the Building a European Data Economy Communication and the Code of Conduct on countering illegal hate speech online. It also includes different policy groups and workshops. Examples of these are the EU Blockchain Observatory and Forum as well as various working groups on the setup of 5G networks. Inquiries and reviews have also been an important part of the DSM. For instance, it included inquires on e-commerce which have targeted both barriers between borders and matters of antitrust. Finally, the DSM strategy has created a number of funds, along with Horizon 2020, for example for Digital Innovation Hubs and the Future and Emerging Technologies Fund.
So far, the DSM strategy has seen a number of successes that are quite significant:
- Achievements on roaming and cross-border portability of digital content were well received by consumers and businesses alike. This is also true of the reform of the Consumer Protection Cooperation (CPC) Regulation, which made consumer rules more enforceable and easier to apply in the digital sphere.
- Regarding the infrastructure side of the EU’s digital economy, the coordination of the use of the high-quality 700MHz band will not only promote the take-up of 4G wireless broadband, but pave the way for the eventual roll out of 5G in 2020, which will make businesses more able to take advantage of the new data economy, and enable them to transition to industry 4.0 models.
- Additionally, the E-government Action Plan, which aims to promote the digital up-take of the public administrations of member states, and will improve the way in which they are able to cooperate and share data with each other.
Nevertheless, not all DSM achievements have been equally well received:
- For instance, although the General Data Protection Regulation (GDPR) will go a long way into harmonizing data protection regimes across the EU in a way that is pretty heavy-handed, sometimes without obvious consequences for data protection. It has also been the target of criticism due to increased administrative costs that it would put on businesses. Importantly, the GDPR makes it unnecessary difficult to develop and market data-based services based on derivatives of information from individuals.
- Similarly, the Directive on Security of Network and Information Systems (NIS Directive) does not go far enough in promoting cybersecurity in the EU.
- The geo-blocking regulation does not target the kind of legislative fragmentation that prevents businesses and consumers using e-commerce from taking full advantage of the single market.
Current pipeline of initiatives that will move over to the next Commission
Accordingly, the DSM is by no means complete and much work remains to be done. Indeed, the Juncker Commission has set itself a difficult goal of completing the remaining legislations which were proposed in 2015 by the end of 2018. An overview of these policies along with initiatives that are yet to enter into force, is displayed in Table 1.
Table 1: DSM policies still to come:
Defining an agenda for the next Commission
While the DSM strategy should be applauded for its aims and its achievements, what has been achieved so far and the proposals which are currently in the pipeline do not go far enough in promoting regulatory homogeneity and will not allow EU member states to take full advantage of digitization any time soon. Indeed, much of the strategy is still disjointed with many of the barriers that prevent digitization to take a stronger hold and generate better economic payoff. What should particularly be at the centre of future work on the digital economy is what most people will consider the core part of something that carry the words single market in its name: dismantling the regulatory barriers in Europe that fragment markets, prevent or reduce the cross-border exchange of digital goods and services, and expanding the free flow of data.
Arguably, many of the past reforms have been good steps forward, but there has been an overall orientation to put the emphasis on regulation rather than liberalization. European digital markets remain all too segmented along national lines and new regulation under the DSM umbrella all too often conform to the political desires of those who either prefer to maintain national segmentation, want to slow new digital market competition down, or embrace European regulation only if it makes the digital barriers to non-EU countries harder. If the DSM is to be a reality anytime soon, it is necessary for the next Commission to put a much stronger emphasis on the liberalisations necessary the digital market in Europe to become a single market.