European Union: The EU Digital Market Strategy – A Mid-Term Review

Last Updated: June 20 2017
Article by Alistair Maughan and Mercedes Samavi

The EU has published a review of its vaunted Digital Single Market strategy, mid-way through the current five-year term of the European Commission. "On track, with room for improvement" summarises the official self-assessment. But, with 35 proposals and policy initiatives made, there is still plenty of work to do if the Commission is to achieve its aim of implementing the strategy by the end of 2018. So, for both EU and non-EU based technology businesses, there are still plenty of European legal and regulatory changes that could affect their operations and products in the next 2-3 years.

The EU's Digital Single Market Strategy (DSM Strategy) was announced with much fanfare in May 2015. The European Commission's goal was to create a digital single market across the EU, with significant initiatives focused on sectors such as e-commerce, media and entertainment, telecoms and the provision of online services. The EU plans for the DSM Strategy, to break down regulatory barriers, and to enable online and digital entities to operate in a free and fair market; and also to move the current market away from the fragmented and eclectic mix of laws and regulations that currently govern the online environment in the EU's 28 Member States.  The Commission believes that the need to comply with multiple local laws across different Member States creates difficulties for businesses, and increases costs for consumers.

By summer 2016, the Commission had already issued a number of legislative proposals, although in truth, genuine progress beyond the initial drawing board had been slow.

The EU has now published its mid-term review of the implementation of the DSM Strategy, setting out the recent achievements of the DSM Strategy against the areas that still need input from the EU level.

What has the DSM Strategy already achieved?

The DSM Strategy is broken down into 3 "pillars" and 16 Key Actions, as we have previously discussed.

Some elements of the DSM Strategy are already starting to become reality.  The Commission proudly points out that retail roaming charges were eliminated effective June 2017, and mobile users periodically travelling in the EU will be able to call, text and access the Internet on their domestic tariff.  In addition, businesses (both in the EU and outside) are in the process of making fundamental changes to their privacy practices and procedures in preparation for the GDPR, which will come into effect May 2018 - for more information, access our "GDPR Readiness Center". Only a cynic would point out that neither roaming charges nor GDPR were officially a part of the DSM Strategy, having been started many years before.

But other achievements gaining significant traction include:

  • Cross-border portability of online content services, which will allow consumers to access online subscriptions to films, music, games and other digital media when travelling in other EU countries.  See our previous comments on the EU's proposals for this.
  • Ongoing coordinated action to make available the high-quality 700 MHz band for wireless broadband in anticipation of the imminent launch of 5G and related offerings such as connected cars and smart cities.

Where does the EU need further action?

Perhaps not surprisingly given the self-assessing nature of the mid-term review, the Commission concludes that it's not doing too badly after all. It seems pleased with the 35 separate legislative proposals put forward. And, given the speed with which the EU's legislative process moves, it would be clearly unrealistic to expect anything to have been finally implemented by now.

So the next 12–18 months are where the real benefits of the DSM Strategy will (or will not) be converted from proposal to reality. The pressure is on the current Maltese presidency of the Council of the EU (to be followed by Estonia and Bulgaria) to ensure that the legislative system actually supports - rather than stymies - the achievement of the DSM proposals.

Some of the key areas in which progress needs to be made are set out below.

Promoting online platforms as responsible players of a fair Internet ecosystem

Online platforms are considered by the EU to be the "key gatekeepers" to the Internet ecosystem.  In fact, in 2016, the EU identified two specific issues that it viewed as necessary for cultivating the growth of online platforms: (1) safeguarding a fair and innovation-friendly business environment, and (2) ensuring that illegal content online is promptly removed from platforms, with proper safeguards in place.

Since its initial analysis in 2016, the EU has conducted a fact-finding exercise on platform-to-business trading practices with results indicating some of the following prevalent issues: discrimination between different suppliers and sellers; online platforms' self-preferential treatment of their own products and services; and a general lack of transparency into platforms' practices.

Consequently, the EU has promised to address issues such as unfair contractual clauses and trading practices by talking to relevant stakeholders and providing tools such as accessible dispute-resolution mechanisms, and fair-practices criteria.

Fighting illegal content requires a similar approach, with buy-in from all stakeholders, in order to be successful. The EU has already committed to reviewing the need for formal, EU-wide flagging and removal mechanisms (so-called "notice and action"), as well as the need for guidance on liability rules. However, there is scope for improving the ongoing dialogue between platforms, and the EU has promised to focus on technical solutions for the removal of illegal content, without undermining fundamental rights such as freedom of speech.

Developing the European data economy

It's estimated that the value of the data economy in the EU, if backed by a suitable legislative framework, will increase to €739 billion by 2020, and the number of data professionals will increase to 10 million by 2020 (from over 6 million in 2016).  No doubt, the GDPR will provide critical support for the data economy, but it's no silver bullet, particularly for nonpersonal data.  The EU recognises that a data cooperation framework will help to strengthen the cross-border free flow of non-personal data; this framework will address Member States' legitimate interests on secure storage, while ensuring availability of data across borders for regulatory purposes.  Coordinated action will also be needed to cover data issues related to cloud contracts for business users, as well as general enforcement powers to ensure that the free movement of data is properly implemented.

In light of this, the EU has stated that it will provide a legislative proposal on the EU free-flow-of-data cooperation framework, to cover the principle of free flow of data, the portability of nonpersonal data and the availability of certain data for regulatory control purposes.

The Internet of Things will certainly contribute to the exponential growth of the data economy, but significant support will be required to ensure a successful rollout in the EU.  As a starting point, the EU will need to untangle the web of liability involved with defective connected devices and vulnerable software.  To that end, the EU has stated that it will conduct further analysis on how it can effectively support the Internet of Things, beginning with a review of liability for data-intensive products, as well as the IP licensing framework that will be involved with such products.

Tackling cybersecurity challenges

Globally, cyberattacks are already a very tangible risk to businesses ( see our article on the recent WannaCry ransomware attack), and with an estimated 6 billion household devices being connected to the Internet in the EU by 2020, cyberattacks will soon become an equally substantial risk to EU citizens.  

The EU has already recognised the potential pitfalls in this area by adopting an EU Cybersecurity Strategy in 2013, and the first legislative act (the Directive on Security of Network and Information Systems) in July 2016.

However, the cybersecurity landscape is ever-changing, and the EU has acknowledged that it is necessary to renew its approach here by reviewing the EU Cybersecurity Strategy and the mandate of the EU Agency for Network and Information Security.

Alongside this, there is a need to retain and develop essential cybersecurity industrial capacities.  The EU has committed to developing measures on cybersecurity standards, certification and labelling to make ICT-based systems more cybersecure, particularly where they interact with connected devices.

What happens next?

It's important to highlight that this is only the halfway point for the DSM Strategy, so it is to be expected that the EU has some way to go in order to achieve its goals.  The mid-term review has made it abundantly clear that the EU needs to improve its dialogue with a variety of stakeholders to ensure that the right policy actions are made across all digital sectors in a resource-efficient and coordinated way to manage the digital transformation process and provide the "excellent infrastructure" that  the EU believes is needed to underpin the Digital Single Market.

And Brexit?

Although the UK's Brexit vote happened only a year into the rollout of the DSM Strategy, there is no sign of that deflecting the EU from its core DSM goals. But in the long term, many within the EU will be concerned if the UK pursues a policy of digital deregulation post-Brexit at the same time as the EU is putting the finishing touches to a series of regulatory changes. That might present difficult decisions for non-EU digital-based businesses seeking to access the European market: Do they base themselves in the EU and accept greater regulation as the price for a harmonised market, or use a lighter-touch UK base for operations and seek to benefit from whatever transitional or market-access arrangements result from the UK's Brexit negotiations? The downside is that a clear picture will only slowly emerge between now and 2019 and, in both cases - the outcome of Brexit negotiations and the completion of DSM regulations – it's quite likely that little will happen until a just-before-the-deadline rush.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Alistair Maughan
Mercedes Samavi
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.