Andrus Ansip | European Commission Leaked digital single market’s ‘evidence file’ reveals Commission’s ambitions Documents show policy came before evidence for cybersecurity measures.

Leaked copies of the upcoming Digital Single Market Strategy and its supporting Evidence file show the European Commission is ready to propose vast regulatory reforms that could affect everything from sales taxes and e-privacy to Internet searches and big data.

The Evidence file, obtained on Monday by POLITICO, tracked changes in the Commission’s priorities and concern for its public image.

A comment inserted by one contributor, for example, suggests the removal of self-criticism regarding the lengthiness of the Commission’s antitrust investigations, because “this could be interpreted as criticizing ourselves.”

The Evidence file also suggests the Commission will consider additional regulations of the Internet, including cloud storage and big data.

European Commission Directorate General for Communications Networks, Content & Technology (DG Connect) “provided detailed text on standardization and interoperability issues… These could be the areas where we decide to go for a top-down approach. To be decided whether we want to be explicit already at this stage.”

The strategy, which is entering into service consultation Tuesday and is set to be released on May 6, sets out a roadmap for pushing member states to accept far-reaching changes.

It is likely to ruffle feathers with its thinly-veiled swipes at slow-moving member states, such as “Europe has the assets to succeed in this global digital economy: at present we are not making the most of them.” The European Council also comes off worse for wear for its unambitious Telecom Single Market package.

The strategy, whose champion is Andrus Ansip, Commissioner for the Digital Single Market, is already coming under fire.

An industry representative source tells POLITICO that the cabinet of Frans Timmermans, first vice president of the Commission, wants to scale back the strategy and insist on more concrete proposals. The source says Ansip has tried to contain internal opposition by only giving his Commission colleagues chapters relevant to their area of responsibility.

With the strategy now in the hands of all departments and implementation still at least three years away, what will be the stumbling blocks?

Copyright and geo-blocking

It’s no secret that a wide-scale review of copyright laws is in the works. An internal document drafted in February by the digital economy department reveals that a deal is being sought by the creative industries. The industries would loosen geo-blocking, meaning they would allow more consumers in other countries to buy products or access apps and websites. In exchange, the Commission would more aggressively enforce copyright.

While anti-piracy measures are back on the table, the Commission has clearly been spooked by the backlash that led to heated criticism — and ultimately abandonment — of Ansip’s favored Anti-Counterfeiting Trade Agreement.

The strategy does mention cracking down on commercial-scale infringement of intellectual property through a review of cross-border civil enforcement. Any moves in that direction will provoke serious hostility as the European Parliament tussles over whether to move in the opposite direction, preferred by Pirate Party MEP Julia Reda, whose controversial copyright report is currently doing the rounds in Brussels.

The Commission has also floated a “possible proposal” to combat illegal content online by harmonizing procedures for its removal across the EU. The leaked Evidence file points to one option being something like the unpopular “porn filter” used in the UK. Another option could be forcing internet service providers and platforms such as search engines and social media to do more to remove illegal content.

Raising some eyebrows is the grouping in the strategy of examples of child abuse imagery and terrorism with copyright-offending material — a new development, and a signal that copyright infringement is about to be taken more seriously.

Platforms

Online platforms such as search engines, social media, e-commerce, app stores and price comparison sites are squarely in the Commission’s sights.

The executive intends to "carry out a comprehensive investigation and consultation on the role of platforms, including the growth of the Sharing Economy,” examining the fees platforms charge commercial partners and consumer awareness of how “paid searches” work.

Telecoms rules

In a dig aimed at the Council, the Commission's document pointedly identifies their failure to finalize a substantial Telecom Single Market package, known as “Connected Continent”. The inter-service version of the new plan, now circulating, confirms that the Commission is giving up on much of the Connected Continent and, for now, settling for a deal restricted to roaming and net neutrality.

However, the Commission does signal that it will return for a second fight on the issue in 2016. The format will likely be a much bigger telecoms overhaul, the kind Martin Selmayr, chief of staff to the Commission president, has wanted for some time.

Expect the member states to fight this one too. Government radio spectrum auctions are cash cows and nations have always balked at any intrusion.

Acknowledging the likelihood of a backlash, the Commission stressed that spectrum sale revenues will remain “exclusively with the member states.”

But that’s not the only big news in the telecoms arena. In what will be music to the ears of traditional phone companies, the Commission has also signaled that it will be looking to level the playing field by regulating so-called “over-the-top services,” which offer Voice over IP (VoIP) calls from providers like Microsoft’s Skype or texting apps including the popular WhatsApp.

The much-maligned cookies directive, which forced websites to seek active consent for the utilization of tracking consumers may soon be dead. The Commission will review the e-Privacy Directive, which it says is currently inconsistently applied.

VAT

After identifying issues surrounding a fragmented and burdensome Value Added Tax (VAT) regime, the Commission identified several possible actions.

It might introduce a common EU-wide VAT threshold for small businesses selling goods and services across borders. That would help clean up the mess, caused in some countries by changes this year to the way businesses charge sales tax across borders. Before the change, companies charged the VAT in their own country, but now they charge it the buyer’s country.

In some countries, notably the UK, the changes removed thresholds that had been relatively high, forcing very small businesses and sole traders to register for VAT for the first time. This led many to stop selling to other EU countries altogether, in a disaster for the Commission's Digital Single Market plans.

Speaking to the Parliament's Internal Market and Consumer Protection Committee (IMCO) on April 14, Ansip reportedly acknowledged “we wanted to protect but we somehow destroyed those businesses.”

Data flow

One curious addition in the strategy is a “free flow of data initiative,” which overturns member states’ restrictions on data locations and data storage around Europe.

The strategy states: “The opportunities that data technologies present can only be realized if we remove the technical and legislation barriers that currently hinder the free flow of data within the EU.”

This is a slap at Deutsche Telekom, partly owned by the German government, which wants to keep domestic internet traffic within national (or — at worst — Schengen) borders.

This could have something to do with the EU’s current tensions with Russia, which intends to force companies including Google and Facebook to store Russians' personal data in Russian data centers.

European cloud

The Commission is proposing a “European cloud” for research, undeterred by a similar, failed, French scheme.

So why is the Commission floating the idea now? On the one hand, it’s pandering to the Germans (one in particular — digital market commissioner Günther Oettinger), who still support a national cloud concept. On the other, it’s getting an easy win by capitalizing on projects that are already well under way, such as the Helix Nebula science cloud.

‘Once-only,’ once again

If there’s one thing Commissioner Ansip is proud of, it’s his “once-only” program, which banned Estonian government departments from asking for personal information more than once. Ansip instigated the program when he was still prime minister of his native Estonia.

Under the principle, Estonia’s various government departments were forced to connect their databases after being banned from asking citizens for their personal information more than once.

Ansip isn’t going quite so far as forcing “once-only” on governments, but the strategy does pave the way for a trial of the principle for businesses via a large-scale pilot project.

Bridging the digital divide

The Commission has flagged that when it comes to improving tech skills, they intend to lead by example. The strategy outlines an action plan that will push interconnected e-government services between member states and force them to move to e-procurement.

Read the leaked Digital Single Market Evidence.

Read the leaked Digital Single Market Strategy.

Additional reporting by David Meyer.

Do you know more? Email zsheftalovich@politico.eu