“Divide and conquer”: EU’s approach to keeping the IT business in control and why it’s been so far more disastrous than wise

The whole trend started back in mid-2000s; it was the time when the European Commission’s battle with Microsoft over product bundling malpractices culminated into one cornerstone decision by the then European Court of Justice (and now Court of Justice of the European Union, CJEU). The court tried, by imposing a voluminous fine on Microsoft, to cure what it was viewed as a heavily distorted music player and browser software market within the Union.

Back at the time, the legal basis for that conflict was on a prime matter for the EU reality: consumer protection and fairness in market competition. As a result, the decision and the hard line adopted by EU authorities was heralded positively by a significant share of the stakeholders within the EU. There were, however, equally many and important actors voicing their concern over the fact that the Commission, in an effort to stay in control of matters as fast-evolving as software products and services, was abruptly pulling together jurisprudence and case law from a wide range of sectors. In doing so, it attempted to use them as the raw material for quickly constructing a prototype software market regulation framework.

Years went by, the IT market was not at all deterred by that strong take of the EU Commission on Microsoft, the interest of providers and consumers shifted from software to web-based versions of digital services and applications, the Snowden case occurred, the world’s attention moved from fair market competition and consumer protection to privacy and security online… And so, here we are in mid-2015 with the Commission in a state of ‘regulatory madness’ trying to keep the relentless growth of online services at bay with the same old tool: multiple probes into major businesses offering hugely popular web services, from Google and its search engine services, to WhatsApp (instant messaging via internet), Skype (VoIP services) and Netflix (streamed TV service). In a communication leaked to the Financial Times at the beginning of May, the Commission states its resolve to go on with these proceedings in an effort to make Europe a more fertile ground for companies offering online services. In addition, the document clearly reveals a major concern from the Commission about the growing power of the US tech companies providing the search, app store, e-commerce and social media platforms on which many online businesses rely.

To put it plainly, the EU, faced with the fierceness in which US firms have swept world markets of web-based services to become de facto global providers, is trying to reclaim some vital space for Europe and its economy with the pretext of wishing to correct malpractices and create fertile ground for the growth of a local EU school of providers for the same services that will be able to rival their US counterparts. However, these new probes are not met with the same welcoming sentiments from the general public or even from stakeholders as back in 2008. The reason is simple: web-based versions of the services we used to enjoy as consumers via software applications are a ‘natural’ next step in the way to provide these services. Enjoying these services via the web is more cost-effective, more streamlined, more technically reliable, and even more user-friendly. Consumers moved from software to the cloud in order to listen to music, store their files or watch TV not because they were just enticed to do so through marketing campaigns but because this way of enjoying these services just proved better. As a result, and as it has been traditionally happening, the average consumer would not hesitate to adopt Spotify or Dropbox or iTunes just because these services are provided by US based firms while he or she is living in Europe.

What the Commission fails to realize so far is that where there is room and need for regulation is in the field of how these services are offered via these novel web platforms: cloud technologies are, regulation-wise, a terra incognita, a field largely unmapped but relentlessly developing, which is so far regarded as an alternate version of conventional, offline computing while it is a totally different thing! It is at making sure that the data involved in the provision of these services are handled in a lawful manner, at ensuring that the information collected as a bi-product of usage of these web outlets is gathered for legally permissible purposes that the EU should turn its attention and primary concern.

If the European Commission cares to work for the fostering of a legally clean and clear playground this is the way to go: make sure that providers willing to offer innovative online services to consumers can come and start business in EU territory knowing that they have crystal clear rules by which they should abide; reassure them that, in doing so, they can foster their businesses unpreoccupied of out-of-nowhere persecution just because they are doing business; and then see the European IT market thrive. This way even the EU regulatory standards will have a reinforced appeal also beyond EU borders. They might actually go as far as contributing to the harmonization of the relevant market worldwide and ensuring for the EU the champion position it so much envies right now over the US…

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