Skip to main content

This is Europe's plan to compete with US internet dominance

This is Europe's plan to compete with US internet dominance

Share this story


Perhaps the best way to understand the EU's plan to create a so-called digital single market in Europe is to think about video streaming. Americans understandably take it for granted that if they’re from, say, California and go on holiday in New York, then their Netflix subscription will work just fine when they reach their hotel. But if someone from the UK goes on holiday in Portugal (less than half the distance between Cali and NYC), they'll find themselves locked out of their account, all thanks to the patchwork of European copyright laws, which require Netflix to negotiate rights for its shows one country at a time. This is the sort of problem that EU politicians want to fix.

covering everything from parcel delivery to telecoms

The way to do this, they say, is by tearing down the digital barriers between the EU’s 28 member states. In plans that have been in circulation for months but were officially announced today, EU politicians laid out 16 key targets to make this happen. These points cover not only video streaming, of course, but touch on everything from cross-border parcel delivery to encouraging continent-wide telecoms companies. The end goal is to enforce a set of regulations that will not only make life easier for the EU’s 500-million-plus population, but also boost the prospects of European tech companies. It's also possible that some US companies will be investigated by the EU in the process — but it's worth remembering that what Americans tend to attack as "protectionism," Europeans are more likely to call "a level playing field."

Such plans were only really alluded to in the EU's official brief, described as the need to "comprehensively analyze the role of online platforms" such as search engines and social media. Such a broad description could cover a variety of actions, but it's previously been reported that this is likely to mean more probes into US tech companies. These probes could include looking at how paid ads appear in search results (something that would be separate to the ongoing antitrust case leveled at Google), how firms look after their customers' data, and whether the regulations governing "old media" companies should also apply to the digital new kids on the block. In the case of telecoms, for example, this might mean things like making VoIP services offer emergency calls, just like traditional phone companies do.

European tech companies need access to more users if they want to compete

For EU politicians, the benefits of the digital single market are clear. The European Commission — the part of the EU responsible for promoting the interests of the European Union as a whole — claims that the digital single market would add €340 billion to Europe’s GDP and create 3.8 million jobs. The main driver of this growth, say analysts, would be fairly straightforward: extra customers. In the US, startups can hit the ground running, scaling quickly by hoovering up domestic users. But in the EU, companies have to negotiate their way through obstacles like differing tax codes before they can sell their wares to their neighbors.

"The European digital market is still way too fragmented."

"Too often US companies start investing in London in the hope of later on replicating their approach for continental Europe," says Forrester analyst Thomas Husson. "[But] this rarely happens this way because the European digital market is still way too fragmented." Removing internal barriers in the EU wouldn't only help European firms, but would also boost their US rivals. After all, if the European Commission had its way, Netflix would only have to sort out licensing in the EU once, for all 28 countries at the same time.

Husson notes that the same problems also hamper the growth of European companies within the EU, and points to the example of the telecom industry. Here, the growth of companies like Vodafone, Orange, and Telefonica has mainly come from markets outside of the EU. "The same could be said for e-commerce," he says.

However, while bringing some legal uniformity to the EU looks good on paper, it’s hardly an open goal. To return to the example of streaming media again, critics argue that getting rid of geo-blocking for the whole of the EU could actually be harmful. For a start, the current system allows media companies to pick and choose where they promote their content, using a country’s licensing fees to offset the cost of localizing shows or movies (there are 24 official languages in the EU after all). Some EU politicians even believe that Europe’s uneven copyright terrain acts as a natural barrier to foreign invasion. In February, the French government office dedicated to the EU warned that "overhauling the principle of territoriality […] could lead to the decay of European culture."

Whatever happens next, though, will only happen slowly. Proposals for the digital single market have been under discussion for years, and the EU’s economically and culturally diverse member states mean disagreements are guaranteed to hobble any negotiation. In addition, many of the laws under discussion go "well beyond economic issues," notes Husson. "This is also a political and societal debate." Rules about how personal data is handled, for example, are bound to run into trouble when countries like the UK and France continue to demand greater powers of surveillance in the name of security. But with the digital world so intertwined into all of our lives — both in Europe and in the US — no one can deny that these are problems that need tackling.