Europe Announces New Regulations for Digital Markets, Services

By Wayne Rash  |  Posted 2016-05-25 Print this article Print
Digital Regulations

NEWS ANALYSIS: The European Commission is proposing changes to its Digital Single Market Strategy that could have a significant impact on U.S. companies, but the final form is uncertain.

In a move that's already being criticized as "illusive" by some, the European Commission has announced a plan to change how it regulates digital markets within the European Union.

The central theme of the announced changes to the Digital Single Market Strategy (DSMS) centers on what the EC calls Audiovisual Media Services, which includes services such as NetFlix and Amazon Prime Video.

However, the provisions of the proposed directive go far beyond what people watch on television into the entire realm of e-commerce. For example, a major impediment to e-commerce in Europe is a problem with geoblocking, in which people in one member state of the EU frequently can't conduct commerce across the borders of other member states.

In many cases, geoblocking is preventing commerce in both physical items as well as in digital material such as music or television shows.

The difficulty in conducting data flows of all types within Europe as well as in and out of the EU are blamed for some of economic stagnation that currently exists there.

A study by Stuart Brotman at the Brookings Institution asserts there is "a palpable sense that Europe is slipping behind economically because of its digital reticence. The eurozone's GDP is set to shrink 0.4 percent this year, which is a sign that some significant EU intervention may be necessary if Europe is to become internationally competitive in the digital domain."

Rather than looking at the slow economy as a reason to encourage companies to innovate, the approach of the EC right now is to add even more regulation to what already is in place. This means that if the EC's plans are adopted, there will be a new layer of regulation added to the rules that already exist.

At this point, however, it's still not clear just how much of this regulation actually will go into effect once the rules are adopted and approved in a couple of years. In addition, the EC has stated as its goal that the level of regulation should be reduced. Half of the member nations of the EU already have gone on record as opposing increased regulations.

Some of the changes outlined in the EC-proposed directive include a new set of rules for comparable digital services. The primary focus in this area is in regard to telecommunications legislation, in which services that perform the same function would have the same rules—for example, VOIP services would be under the same rules as landline and cellular telephones. The EC already has launched a series of public hearings on the telecom legislation and on electronic-privacy, both of which would fall under those rules.

It's worth noting that the EC has recognized that some regulatory actions are having a negative impact on the European economy, and for that reason, the EC also announced that it is working on ways to improve trust in e-commerce—such as allowing clearly sponsored search results, encouraging electronic identification and electronic payments that can function across borders—to free up commerce in Europe.


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