To trade in Europe, digital businesses still have to deal with 28 sets of national contract laws, adding an estimated four - eight billion euros a year to their costs. Many of these are very small businesses, arguably the quiet powerhouses of the European economy. Research by the European Commission (see 'related links' below) suggests only 15 percent of European consumers say they have ever crossed a European Union (EU) border while shopping online. Only four percent of internet traffic from EU countries goes to online services in another European country, whereas 54 percent of it goes to services in America.
In November 2014, when Jean-Claude Juncker took over as president of the European Commission (the Commission) with a unified digital continent the priority of his mandate, he set out an ambition to boost growth by 415 billion euros annually. The new strategy has emerged quickly and endorses a Commission objective to proceed quickly with pragmatic steps to effect change that will visibly and positively impact consumers’ lives.
The Digital Single Market Strategy outlines a new regulatory landscape for technology and telecoms firms and contains 16 legislative and non-legislative proposals that the Commission, led by Directorate-General CONNECT intends to present in 2015 and 2016. These proposals are grouped into three pillars and address issues that matter most to consumers, such as access to digital content and common consumer rights for purchases.
Pillar I: Better access for consumers and businesses to digital goods and services across Europe
Pillar I focuses on providing better access for consumers and businesses to digital goods and services across Europe. In order to get closer to achieving this goal, the Commission has committed to:
- Create rules to make cross-border e-commerce easier: this includes harmonised rules on contracts and consumer protection when you buy online: whether it is physical goods like shoes or furniture; or digital content like e-books or apps. Consumers are set to benefit from a wider range of rights and offers, while businesses will more easily sell to other countries. This will boost confidence to shop and sell across borders (see ‘related links’ below for Digital Agenda factsheet for more information).
- Enforce consumer rules more rapidly and consistently: this will be achieved by reviewing the Regulation on Consumer Protection Cooperation.
- Create more efficient and affordable parcel delivery: currently 62 percent of companies trying to sell online say that too-high parcel delivery costs are a barrier.
- End unjustified geo-blocking: geo-blocking is a discriminatory practice used for commercial reasons, when online sellers either deny consumers access to a website based on their location, or re-route them to a local store with different prices. Such blocking means that, for example, car rental customers in one particular Member State may end up paying more for an identical car rental in a different destination.
- Identify potential competition concerns affecting European e-commerce markets: the Commission has launched an antitrust competition inquiry into the e-commerce sector in the European Union.
- Creating a modern European copyright law: legislative proposals will follow before the end of 2015 to reduce the differences between national copyright regimes and allow for wider online access to works across the , including through further harmonisation measures. The aim is to improve access to cultural content online – thereby nurturing cultural diversity – while opening new opportunities for creators and the content industry. In particular, the Commission wants to ensure that users who buy films, music or articles at home can also enjoy them while travelling across Europe. The Commission will also look at the role of online intermediaries in relation to copyright-protected work. It will step up enforcement against large scale infringements of intellectual property rights.
- A review of the Satellite and Cable Directive: this will help to assess if its scope needs to be enlarged to broadcasters' online transmissions and to explore how to boost cross-border access to broadcasters' services in Europe.
- Reduce the administrative burden businesses face from different regimes: this will ensure that sellers of physical goods to other countries will also benefit from single electronic registration and payment; and with a common threshold to help smaller start-ups selling online.
Pillar II: Environment - Creating the right conditions and a level playing field for digital networks and innovative services to flourish
The Commission will:
- Present an ambitious overhaul of telecoms rules: This includes more effective spectrum coordination, and common -wide criteria for spectrum assignment at national level; creating incentives for investment in high-speed broadband; ensuring a level playing field for all market players, traditional and new; and creating an effective institutional framework.
- Review the audiovisual media framework: this will focus on the roles of the different market players in the promotion of European works (e.g. TV broadcasters, on-demand audiovisual service providers, etc.) in order to make it fit for the 21st century. It will also look at how to adapt existing rules (e.g. the Audiovisual Media Services Directive) to new business models for content distribution.
- Comprehensively analyse the role of online platforms (e.g. search engines, social media, app stores, etc.) in the market: this will cover issues such as the non-transparency of search results and of pricing policies, how they use the information they acquire, relationships between platforms and suppliers, and the promotion of their own services to the disadvantage of competitors – to the extent these are not already covered by competition law. It will also look into how to best tackle illegal content on the internet.
- Reinforce trust and security in digital services: notably concerning the handling of personal data. Building on the new data protection rules, due to be adopted by the end of 2015, the Commission will review the e-Privacy Directive.
- Propose a partnership with the industry on cybersecurity in the area of technologies and solutions for online network security.
Pillar III: Economy & society - Maximising the growth potential of the digital economy
The Commission will:
- Propose a 'European free flow of data initiative' in order to promote the free movement of data in the European Union: sometimes new services are hampered by restrictions on where data is located or on data access – restrictions which often do not have anything to do with protecting personal data. This new initiative will tackle those restrictions and, as a result, encourage innovation. The Commission will also launch a European Cloud initiative covering certification of cloud services, the switching of cloud service providers and a "research cloud".
- Define priorities for standards and interoperability in areas critical to the digital single market, such as e-health, transport planning or energy (smart metering).
- Support an inclusive digital society where businesses and citizens are better connected and there is a reduction in multiple requests for the same information and where citizens have the right skills to seize the opportunities provided by the Internet and boost their chances of getting a job: A new e-government action plan to also connect business registers across Europe, ensure different national systems can work with each other, and ensure businesses and citizens only have to communicate their data once to public administrations. This means governments will no longer have to make multiple requests for the same information when they can use the information they already have. This "only-once" initiative will cut red tape and potentially save around five billion euros per year by 2017. The roll-out of e-procurement and interoperable e-signatures will also be accelerated.
Additional concurrent areas of focus will enable further integration and build on existing work in the areas of payment services and telecoms
institutions are aware that they will also need to react within their own organisations to the themes of big data and cybersecurity. The administration is currently looking for solutions to analyse its massive stock of data and also to prevent cyber threats internally. Combined with the revised Directive on payment services, these changes to e-commerce have the potential to enhance the single market, simply by making it easier for consumers and businesses to trade securely with one another.
New rules on telecoms, and especially allocation of spectrum, will complete the Telecom Package issued two years ago and result in new rules on net neutrality and roaming. The European Fund for Strategic Investment (EFSI), to be operational this autumn, will also complement the digital single market by financing major infrastructure projects in broadband and other digital infrastructures.
The sheer scale of the ambition of these proposals is a positive step forward for the integration of the single market. This strategy sets out a comprehensive framework to drive opportunities for growth and prosperity in a new digital world. Harmonisation and standardisation of many government initiatives should also reduce barriers for small businesses venturing beyond what is currently their local market. Combined with the forthcoming Payment Services Directive () changes, these proposals clear a path for a technology-led growth strategy, embracing the potential of invention rather than just innovation of existing products and services. These proposals herald a transition that should benefit all citizens and enable organisations to compete more effectively on a global stage.
introduces a more open access architecture for the payment systems eco-system, encourages new business models providing digital and mobile technology solutions where payments are embedded in a service, rather than being a standalone activity. We anticipate a new generation of products and services that will require instant payments and access to real time data to deliver these new capabilities. The combination of the two initiatives provides an outstanding platform for growth and innovation.
Liz Oakes is an Associate Director, Global Payments Centre of Excellence within the Management Consulting practice at KPMG LLP. Ms Oakes has 20 years’ experience in payment systems both in central clearing and settlement systems and in bank payment systems design globally.
European Commission website: EC Roadmap
European Commission website: EU Digital Agenda factsheet
European Commission website: EU Barometer on e-commerce deliveries
European Commission website: Commission launches e-commerce anti-trust sector inquiry
The Economist website: Disconnected continent
European Commission website: A Digital Single Market for Europe: Commission sets out 16 initiatives to make it happen
Related articles in this issue:
Related articles in previous issues:
Next Step to Create the Digital Single Market: EU Lawmakers Adopt the New Regulation on Electronic Identification and Trust Services for Electronic Transactions in the Internal Market ( Newsletter, Issue 24, October 2014)
The New European Commission: a Closer Look at President Juncker´s Vision for the EU Internal Market and Economic and Monetary Union ( Newsletter, Issue 24, October 2014)
Virtual Currencies: a House of Cards or a Mass Market Trend? The Answer to that Question Remains Pending ( Newsletter, Issue 25, January 2015)
The Future of Payments: European Commission Invited Exchange of Views at its Conference on Emerging Challenges in Retail Finance and Consumer Policy ( Newsletter, Issue 25, January 2015)
European Payments Council 2.0 Is Now Operational: Stakeholders Are Invited to Stay Engaged in the Evolution of the SEPA Credit Transfer and SEPA Direct Debit Schemes Going Forward ( Newsletter, Issue 26, April 2015)
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