What you need to know about the EUâs plan for a digital single market

Introduction

The EU believes that economic growth in Europe is being held back by disparate rules for digital goods and services. It believes this is holding the private sector back and disadvantaging EU citizens. As a result, the EU wants to remove regulatory barriers to cross-border trade and create a true digital single market.

The EU Commission claims a digital single market could contribute €415 billion per year to the EU’s economy and create 100,000s of new jobs.

The EU’s digital single market strategy is split into three broad areas; better online access to digital goods and services, creating an environment where digital networks and services can prosper and making digital a driver for economic growth. These policy areas are somewhat vague and so we will delve further into the detail of what they actually mean.

Better online access to digital goods and services

This policy area is concerned with removing obstacles between the digital and offline world in order to break down barriers to cross-border online trade.

Improving parcel delivery

Trade is often limited between EU countries as consumers prefer to buy goods and services online in their own country. Moreover, businesses often cite high delivery costs as a problem for cross-border trade. The Commission wants to make parcel delivery more affordable, build consumer trust and make it a more attractive option for businesses.

E-commerce

The Commission claim that only 15% of consumers currently buy online from other EU countries. They especially want to target SME businesses, who find it harder to comply with other regulations that selling into another state implies. The aim is to harmonise consumer and contract rules.

Tackling geo-blocking

Geo-blocking means restricting access to online services based upon your location. This is incompatible with a single market. Imagine being restricted access to your Netflix account when travelling to Scotland if you live in Manchester. This is what happens between EU states at the moment. The Commission thinks this is frequently done without clear justification and amounts to unfair discrimination.

Modernising copyright law

The Commission state that they want to ensure a better balance in copyright law between creator and consumer interests. Furthermore, enforcement against commercial-scale infringements of intellectual property rights will be amped up.

Simplifying VAT rules

Businesses are held back from buying and selling in other countries by burdensome VAT rules. The Commission states, “Selling cross-border within the EU can mean over € 5 000 in VAT compliance costs, per extra country per year.”. To solve this the Commission wants a single electronic registration and payment system across Europe, including common thresholds.

Creating an environment where digital networks and services can prosper

This means legislation changes concerning infrastructure such as, super-fast broadband across Europe. There needs to be level playing field across Europe for the market to function efficiently.

Making telecoms rules fit for purpose

Telecoms markets remain ‘isolated and national’ according to the Commission and so they want to harmonise telecom markets in the future. How they will achieve this has not been explained in detail.

A media framework for the 21st century

The growth in use of smart phones and devices, coupled with the increasing use of on-demand services is driving change in the economy and provides opportunities for economic growth. This will be an area of focus for the Commission.

Online platforms

Online platforms are services such as, search engines, smart phone apps, social media, price comparison websites and the sharing economy. Such services play an increasingly important role in the life of consumers and present opportunities to businesses. However, the Commission has concerns in this field around the use of data and transparency. The EU are keen on data portability across online platforms and so this may be an area of action. They will also look at how best to deal with illegal online content.

Strengthening trust in online services

The Commission refers to the ongoing concern among consumers over how their personal data is used and the lack of control. The General Data Protection Regulation (GDPR) will primarily address this issue but the Commission will soon be reviewing the E-Privacy Directive. This is the piece of legislation that informs UK rules for electronic marketing, The Privacy and Electronic Communications Regulations.

Making digital a driver for economic growth

This one is self-explanatory and is about harnessing the digital economy as a driver of economic growth.

Digitalising industry

Assist industrial sectors to utilise new digital innovations.

Develop standards and interoperability

It is difficult to grasp what the EU means by interoperability, the aims are abstract. Broadly speaking the EU wants to define standards for the latest developments such as, internet of things or cloud computing.

Making the most of the data economy and cloud computing

This point is similarly vague but is related to issues around ownership of data and data protection policy. The Commission will launch initiatives on the free flow of data, and a European cloud.

Unlocking the benefits of e-services and advancing digital skills

This means ensuring that EU citizens have the appropriate skills to thrive a modern digital economy.

Conclusion

A digital single market should drive economic growth in the EU and deliver savings and choice to consumers. However, there is concern that a number of the proposals have not been fully thought through and could have unintended consequences. The DMA will monitor legislative proposals as they emerge and seek to influence the final outcomes with strong input from our members.

Remember: our annual data protection summit takes place February 26, featuring keynotes from the ICO’s Chris Graham, the DCMS’ Baroness Neville-Rolfe and Facebook. Find out more here.