By:
Gregory P. Bufithis, Esq.
Founder/Managing Director
30 May 2016 – A number of years ago there was a delightful story in The Economist “Where is Europe’s Bill Gates?” It noted that Britain had Autonomy, which made specialized search software, and ARM, which designed the microchips for Apple’s iPhones. Both were leaders in their fields, but neither a giant. And we know what happened to them.
Yes, there should have been more funky tech coming out of Europe. Individual ideas and people are the key, obviously, but there are many issues that Europe’s tech ecology cannot ameliorate. One is the absence of a market as big and homogeneous as American tech firms enjoy. Another is a relative shortage of capital for start-ups and growing firms. The third is the lack of entrepreneurs who combine technological expertise, business acumen and … ok …. the balls that, in 2006, reputedly let Mark Zuckerberg turn down Yahoo!’s offer of $1 billion for Facebook.
And, oh yeah. The politics.
Last week the EU Commission made another push to bring the EU into the digital future, but its proposals showed how constrained Brussels is by the same old politics. The latest iteration of the Commission’s digital single market strategy (or DSM) touted advances on several small bore initiatives and kicked the big ticket items down the road. As these proposals showed, national interests and powerful industry lobbies have dampened the ambitions of Brussels policymakers, and not for the first time.
The big, important issues … avoided: geo-blocking, internet platforms, copyright.
Unveiled just over a year ago, the digital strategy is the third try in a decade to lower barriers to commerce and, according to the Commission, add another €415 billion annually to the European Union’s economy. The Commission has already proposed five initiatives, ranging from letting Europeans watch Netflix while on vacation to better protections for online shoppers.
The four proposals and one public communication on Internet platforms announced last week are a bit more politically treacherous. They include plans to prevent merchants from rejecting online shoppers based on where they live to making video-streaming services offer 20 percent European content. The package is designed to boost Europe’s ailing economy. Increased consumer trust and legal clarity on platforms, e-commerce and audiovisual media will help push EU consumers to spend more money online, according to the Commission.
But …. EU consumers might not see the results of this legislation for years to come and even then, the proposals could be scaled down so much that they might not produce the economic benefits touted by the Commission.
A recent piece in Politico nails it:
The Commission is already behind schedule with its headline-grabbing push on geo-blocking and platforms, originally due out last year. And the proposals put out on Wednesday addressed only a part of the issue with geo-blocking — in other words, preventing consumers from buying goods online across borders in the EU — and merely delayed dealing with the regulation of Internet platforms.
The European Parliament and Council will tweak the proposals in the coming months, offering up more opportunities for delays. France and Germany, two of the EU’s most powerful member countries, will likely put up the biggest roadblocks.
The hardest lifts are well ahead. The Commission has yet to attack the most controversial issues, including a bruising copyright fight with marquee singers and Hollywood studios and a review of calcified telecoms laws in a fast-changing and increasingly competitive industry. Both have been put off until, at the earliest, late September.
The divisions exposed in the past year look increasingly likely to prevent the EU from meeting its self-imposed year-end deadline for the whole digital single market strategy.
There are sooooooo many areas to discuss here but let’s pick just one … e-commerce:
The Commission’s proposed rules on e-commerce are supposed to make it easier and cheaper for customers to buy online. Though hailed as a digital advance, they’re not even all that digital: the most immediate effect will be on real-world postal services.
Currently, it can cost almost twice as much to mail a 2 kilogram package from Croatia to Greece as it does to send it to Denmark, about the same distance away. The Commission plans to create a public website to help consumers compare shipping prices in the hopes of spurring competition.
New rules to help consumer protection agencies cooperate across borders as well as adapting a 2005 measure to protect consumers against deceptive advertising for the digital age (the so-called Unfair Commercial Practices Directive) sailed through negotiations in Brussels.
But my favorite is one outlined … again, in a Politico piece (I am picking and choosing across 12 Politico and Financial Times articles) … which had me rolling on the floor:
Another proposal will force online merchants to sell to a potential customer no matter where they are in the EU but not necessarily ship to them. That means someone in Poland can now buy something from a German e-commerce site, but might have to cross the border to pick it up.
“Who is going to do that? No one will. That’s nonsense,” said Maurits Bruggink, the secretary general of e-commerce lobby group EMOTA.
Yet industry groups were relieved. “There is an obligation to sell everywhere but we don’t have to deliver outside of the territorial scope we have chosen. That’s what we wanted, we wanted this assurance that we are free in our entrepreneurship where to deliver,” said Léon Molenberg, senior policy adviser at trade group ECommerce Europe.
Ahhhhh. But here’s the finer print. Copyrighted digital content, like books and music, isn’t covered. Said Monique Goyens, director-general of BEUC, a consumer rights organization:
“It is … regrettable that consumers can still be blocked from buying digital products such as e-books and music from sellers based in other countries. TV series, films and sport events will also stay off-limits.”
Amazon is going nuts. On their company blog they noted:
“Sellers on the Amazon websites face restrictions from manufacturers and wholesalers who often prevent them from selling cross-border. We look forward to measures from the Commission that will ease these barriers.”
There are many ways to ease digital commerce across EU frontiers. Cross-border consumer law needs to be streamlined. It’s still difficult to tell which national jurisdiction applies when cross-border sales conflicts arise. Tax and copyright laws differ widely across borders, making it that much more difficult for small sellers to figure them out.
But it will not happen. Politics and bureaucracy. Within the EU Commission you have three divisions involved, all squabbling over drafting the legislation. And nobody giving in, everybody protecting their turf. Said Julia Reda in a piece in the Financial Times last week (she is a member of the Greens group in the European Parliament who supports the introduction of a single European copyright title that makes any show or music available anywhere in the EU):
“All we get is another baby step when what we need is a leap. Commissioner Oettinger [European Digital Economy Commissioner] is once again coming to the defense of business models [note: Oettinger wants piecemeal regulation] that have become untenable in the information age and holding back the ambitions of his Vice President Ansip, who is on record recognizing that we need significant change”.
