Digital4EU stakeholder forum (summary)

digital4euOn 25th February 2016, the Digital4EU Stakeholder Forum, organized by the European Commission, took place in Brussels. This one day conference was centred on the progress made in creating a Digital Single Market in Europe. The agenda of the day started with a pre-conference breakfast session about the European Fund for Strategic Investment (EFSI)’s financing opportunities for digital projects, especially for extending the roll-out of Broadband internet connections in rural areas that have not yet achieved full internet penetration.

Following a brief coffee break, the main conference started with a short introduction by the moderator, Gareth Mitchell (of BBC Click), which was followed by keynote speeches from Guenther Oettinger (Commissioner for Digital Economy & Society, European Commission) and Wepke Kingma (Deputy Permanent Representative of the Netherlands to the EU, since the Netherlands currently holds the rotating EU presidency). Commissioner Oettinger sketched an overall picture of the challenges the EU faces for developing a vibrant integrated Digital single Market. The issues he raised ranged from the need to provide its citizens with the necessary Digital Skills to take advantage of the growth in digital jobs, to infrastructure investment plans and the challenge of balancing the freedom for businesses to innovate with the needs of protecting the fundamental rights of privacy and dignity of citizens. Wepke Kingma expanded on some of the points, highlighting the more than 20 events on digital innovation that will be held in the Netherlands over the coming months as part of the Dutch EU presidency.

The first panel discussion was on the topic of “Delivering the Digital Single Market – from the Digital Economy and Society Index to action”, which started by introducing the audience to the Digital Economy and Society Index (DESI). DESI is the main analytical tool developed by DG CONNECT to provide evidence input for the assessment of digital development in the EU as a whole as well as in Member States. The DESI combines more than 30 indicators to rank each country based on its digital performance. It is divided into five main dimensions reflecting relevant policy areas: Connectivity, Human Capital, Use of Internet (by citizens), Integration of digital technology (by businesses) and Digital public services. Guided by some of the results of the DESI index the panel discussed some of the national differences underling the different scores, and ways in which the situation in the countries that are falling behind could be improved. A key message from this panel was that within the Digital Single Market, improvements in any of the member states results in benefits for all member states.

Next, after a short coffee break, came a keynote speech by Roberto Viola (Director-General of DG Connect) which summarized what lies ahead in terms of the development of the Digital Single Market. Transforming the industrial, service and scientific environment in to a digital environment, moving data and extracting knowledge from this data is key to competitive advantage. To achieve this there is a need to work together to get the most out of the many existing national initiative (e.g. Catapult centres (UK), Industry du Future (France), Dot-Zero (Germany)). Some of the other items in the DSM agenda that were touched upon were:

  • the European cloud initiative, creation of the ecosystem that is needed for extracting knowledge from data. Starting from the science community and on to technology, service and manufacturing communities Europe needs to build data factories of the future.
  • Reform of the audio-visual media services directive, reforms of rules about content which will be inspired by the fundamental values of freedom of speech and freedom of the internal market. Among these are fighting against unjustified geo-blocking which is necessary to promote cross-border e-commerce. The current situation was described as alarming with half of attempts to do cross-border internet shopping being unsuccessful and more than 80% of EU consumers reporting that they experienced geo-blocking.
  • Levelling the playing field in copyright between all parts of the value chain, starting from authors and performers to producers, distributor and aggregators. There should be fairness and respect of rules which should be simple and understood by everyone.

This keynote was followed by three more panel discussions. The first of the was on “The Digital Economy: data and computing opportunities for Europe”, which addressed

  • emerging business models which are based on data, and the related issues of data ownership and access, as well as at Internet of Things in terms of opportunities it creates and specific rules it might need
  • need for European action on data infrastructures including high performance computing, data storage and connectivity to promote interoperability and reduce fragmentation

The second was on “Innovate, start and scale-up”, which explored the EU digital start-up environment focusing on the fragmentation of the European startup and scaleup ecosystems, the lack of engagement among large corporates and the startups communities, and possible measures to tackle these issues.

The final panel was on “Platforms, is there a need to regulate?” In order to approach the question in the title of the panel, the speakers put forwards a series of additional questions. Are the dominant positions of some online platforms leading to abuses of dominance? Do competition authorities have the right tools to grasp these realities? How do we tackle the regulatory asymmetry between the regimes to apply to the new online platforms and the regulations that apply to more traditional players, like telecoms networks? Do platforms comply with the existing legislation? Do they actually know what the requirements are, under certain legislation? E.g. under the unfair commercial practices directive platforms are actually obliged to disclose their business model, to disclose ‘who’ they are, are they a ‘comparison tool’, or a ‘search engine’? How do they rank the different results for a users’ query? This is all part of the commercial practices directive, but many platforms do not comply with these, which is why they are being taken to court. The current problem is more a matter of enforcement than a matter of creating new rules. Another problem that was mentioned is that there is a lack of consistency in Europe with some rules being applied to local/European companies that are not being applied to global ones. To the question if platforms are regulated enough, the answer was a clear “it really depends”. As an example of what this might depend on, it was highlighted that Ebay is in a very different business than Facebook and that we accept monopolies (so long as they don’t abuse their position) in certain areas/markets, but maybe in others we do not. Facebook can be argues is one of the biggest media companies in the world. Generally there are different rules about monopolies for media companies than for retailers (we demand plurality in media companies). The question is, “what do we want to achieve, what do we regulate for?” That may vary very much depending on the platform (type) we are talking about.

In an environment in which technologies are moving so fast, it is much more important to come with a results based regulation (regulation that is defined in terms of the impact on people) and not in term of the technology, leaving it up to the platforms to decide how they want to achieve the desired goal that is set out by the regulation.

To my question: “Is there a problem in that competition regulations are based on the concept that corporate value and power is expressed in money, but now we are speaking of value based on data?” the panel responded with a variety of answers, including:

  • Do regulators, e.g. market dominance anthologies, have the right tool to tackle abuse of dominance if the mechanism for determining this is based on price and the price is zero? Under such circumstances you are probably not going to come to any conclusion about how much concentration of data in a single ‘pair of hands’ may lead to market dominance and an eventual abuse. Through abuses of privacy, for instance, that can worry consumer welfare and not price. Nowadays competition authorities do not have sufficient tools to deal with this.
  • The data that you give as a consumer should be taken into account. The bulk of regulations were not made for contracts where there is a non-monetary compensation, e.g. giving data. But recently the commission proposed a new directive for online and offline purchases of digital content and services. For this “Data ownership initiative” for a very first time they have applied a concept that also covers ‘in kind payment’. Even though it only considers proactively given data by the user it is a huge step forwards, because it is high time that consumers are protected when they give a valuable counter performance.

Among the final remarks on this panel, one that resonated most strongly with the principles of CaSMa was that “Market competition laws should flow from ethical reasoning, and we rightfully should not accept market outcomes in every sector of our life.”

A full recording of the conference is available for viewing (in three languages) via the Digital4EU website at https://scic.ec.europa.eu/streaming/digital4eu-2016-gasp

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