Digital Single Market: still on track but needs ‘more support’, to ‘embrace risk’

By Neil Brady

It is now two years since the Digital Single Market (DSM) strategy was first announced.

Composed of 16 interrelated initiatives and designed to extend the principles of free movement of goods, persons, services and capital to the digital sphere, it has been estimated that full implementation of the Digital Single Market strategy could add €415 billion a year to the EU’s economy, and create hundreds of thousands of new jobs.

The European Commission recently marked the halfway point in the implementation of the DSM with the announcement of its mid-term review by Andrus Ansip, Vice-President for the Digital Single Market. The review took stock of the progress made so far and called upon co-legislators to “swiftly act” on the initiatives already agreed. It also identifies three areas where further EU action is needed, including cyber security, the free-flow of data and online platforms.

This comes as “no surprise”, however, to Robert Madelin, former Director-General, DG CONNECT, who was a key figure in the development of the Digital Single Market agenda.

Mr. Madelin visited the Institute recently to give a keynote address entitled ‘Digital Single Market Act II: Data, Robots, Platforms and Brexit’.

“Where we are now, halfway through…by definition is with a glass half full, and so it’s no surprise when you look at the commentary on Vice — President Ansip’s review, some people say ‘yes, we’re still going in the right direction, we need to accelerate’ and some people say ‘this will never get anywhere”, said Mr. Madelin.

So how much progress has been made?

There have been some notable achievements but there have also been disappointments, with most commentators agreeing that all stakeholders need to deliver on several outstanding issues over the next 24 months, if the DSM is to reach its potential.

One of the more high-profile accomplishments - fair use data policies notwithstanding - has been the abolition of roaming charges, which took effect earlier this month. This means that EU citizens can now expect to pay the same rate for calls, texts and, for the most part, data across all EU member states.

Significant progress has also recently been made on the thorny issue of the Audiovisual Media Services Directive, with the Council of Ministers recently agreeing on a set of far reaching reforms here. The reforms will legally oblige video-on-demand providers to reserve 30%, of their commissioning budget for European works, to create a level playing field for traditional video broadcasters, as well as oblige companies like Twitter and Google to counter hate speech, speech that incentivises terrorism and speech that harms minors, by creating flagging mechanisms to facilitate better take down notification systems.

Agreement has also been reached in the Commission on new rules pertaining to the cross-portability of content, so that from 2018 EU citizens will be able to access material that they acquired in their country of residence, elsewhere in the EU.

And in March, the Commission also introduced the European Interoperability Framework (EIF), providing guidance on interoperability standards for digital public services, to ensure that both existing and new legislation does not compromise efforts in this area.

But several stumbling blocks remain, including in the areas of copyright reform, spectrum allocation, the ‘data economy’ and cross border e-commerce and geo-blocking.

The proposed Copyright Directive, first announced by the Commission in September 2016, has proved particularly problematic. This provides for the extension of ancillary or ‘neighbouring’ copyrights to news publishers under Article 11, while Article 13 proposes changes to intermediary liability law that would require online services to monitor the uploading of user-generated content (UGC). It also places severe restrictions on text and data mining (TDM) processes.

While the proposed reforms are laudable in intent, they have found little enough support amongst stakeholder groups, policy makers and platform providers. Text and data mining processes, for example, are an integral research tool for a range of organisations, from media organisations to startups, and as such, restrictions in this area are highly likely to stifle the EU’s digital economy.

In March the Legal Affairs (JURI) Committee of the European Parliament (EP), led by copyright rapporteur Therese Comodini Cachia, MEP, released its draft report on the matter, recommending a number of amendments to the proposed reforms. On June 8th, the Internal Market Committee (IMCO), led by rapporteur Catherine Stihler, became the first committee to cast its vote on the proposals. Other committees are due to cast their votes in the coming weeks and months, with the JURI Committee due to do the same on September 28th. How the Commission will respond remains to be seen.

During his address at the IIEA, Mr. Madelin suggested that part of the explanation for the mixed success of the DSM so far is that there has been “a certain hesitation” by policymakers when it comes to the actions required to build a single market fit for the digital age, and to relinquish control. He singled out the failure to establish a single spectrum market as a prime example of this:

“The biggest tragedy is spectrum. We want everything on our smartphone now, at a low cost…but we also want a lot of other things…we want more redress, and that’s fine but the devil is in the detail, and when you say to 28 consumer associations ‘if we had harmonised rules it would be easier’…I think you see a certain hesitation.”

Though not directly a part of the DSM strategy, perhaps the biggest legislative achievement in the digital sphere, and one that has, for the most part, been well received across the board, is the General Data Protection Regulation (GDPR).

Due to come into effect on 25 May 2018, the GDPR will create a set of harmonised rules for transfer of EU citizens’ data, as well as provide regulators with the power to impose fines of up to €20m or 4pc of a company’s annual turnover for failure to comply with the new law. Together with the proposed e-Privacy Regulation, which will ensure newer messaging services such as WhatsApp and Facebook Messenger are also subject to strict data privacy rules, these two pieces of legislation are likely to fundamentally alter many of the dynamics that have underpinned the commercial development of the internet over the last two decades, and significantly enhance privacy and accountability.

In all of this however Mr. Madelin struck a somewhat cautionary note, reminding attendees of the big picture need to strike a balance between regulation that is effective, doesn’t stymie innovation and is complementary to other legislation, such as Privacy Shield.

“The big [data issue] is how shall we implement the GDPR in such a way that it’s good for business as well as the protection of my personal data. Can we implement GDPR in a way that is challenging but feasible for others?” he asked.

In this context Mr. Madelin also said greater consideration should be given to the question of whether, in addition to rights, the wider societal benefits of data also confer new obligations and duties on individuals as citizens.

“A lot of people say data is the new oil, by which they mean it is an asset. I like to think about data as the new ‘blood’. If by giving my whole genome as a gift to a university research department, and they put it on a big computer [and] I can actually help them save lives, is it ethical for me to refuse? I think we should try to think about personal data up at that level, because if you believe data analytics can drive better things for society, then somewhere we need to think about the opportunities and benefits, and the duty to contribute”.