The Digital Single Market Strategy Misses the Point

The European Commission wants to ensure that the European single market includes data and data processing, as well as physical products and services, but risks becoming bogged down in a mess of piecemeal activities, because its strategy lacks vision.


The Strategy

On May 6 this year, the Commission announced its digital single market strategy. Reaction has been, to put it politely, somewhat mixed. Access, an international human rights organisation focused on the Internet, commented memorably that delivery on the strategy’s promise to improve people’s fundamental rights would be welcome, but it is a crippled unicorn: a fabulous beast going nowhere. This sums up much of the criticism, which is that it puts forward a mixed bag of desirable objectives – improving people's fundamental rights is only one of these – without a clear overall plan to achieve them.

The objectives are addressed by sixteen activities in areas ranging from privacy to parcel delivery. They include consumer law, copyright law, VAT, and cross-border digital content distribution. Many of these are old battlegrounds with entrenched positions, where opposition is expected. For example, reacting quickly on May 16 from the Cannes festival, film and video trade organisations called for the preservation of territorial licensing. Success will be patchy, at best.

What Consumers Want

Standards enable markets. The massive global market in digital goods and services is enabled by the standards of the Internet and the World-Wide Web.

People in Europe, and elsewhere, desire to achieve this market fully, and to dismantle the political and commercial barriers that prevent its realisation. With increasing travel, and common availability of information over the Internet, they are aware of things that they want that are available in other countries. They see it as ridiculous that they cannot have these things, or can only have them at a higher price than others pay elsewhere.

Digital Platforms

The Commission wants to remove the barriers within Europe, but not the barriers around Europe. It wants to end the market dominance of large US companies, achieved partly, some argue, by unfair use of consumers’ personal information. It wants to give European businesses “a level playing field”. The fear is that this will mean a resort to protectionism, and that the strategy’s activity to analyse the role of online platforms in the market (search engines, social media, app stores, etc.) is a tool for this purpose.

The Commission will do well to look in depth at digital platforms, although this should not become an excuse for protectionist legislation. They are used, not only to deliver services to end users, but to enable companies to create and deploy services by assembling resources. They are emerging as a key part of the digital infrastructure. They are also, in their current form, threatening to limit market growth.

Unlocking Growth

The Internet and world-wide Web standards enable transport of digital goods and services across national boundaries, but not necessarily across boundaries between digital platforms. Each platform supplier wants to encourage use of its platform and discourage use of competitors. It is easy to work within the constraints of a single platform, hard to integrate products and services across different ones. But integration of digital products and services is what businesses want to do. They want, for example, to use a cloud platform to analyse data obtained from social media and display the results to users of apps from different app stores. This is where a large part of the potential for growth in the digital market lies.

Standards enable markets. The key to unlocking further growth in the digital market is a new set of standards that will enable integration of products and services across digital platforms.

The Opportunity

Protectionism is a defence that is often adopted by communities that have been left behind by events. A better course is to take advantage of change when a market moves in a new direction. Europe can do this by putting its weight behind initiatives in digital platform standardisation.

The announced strategy does include an activity to define priorities for standards and interoperability in areas critical to the Digital Single Market, such as e-health, transport planning or energy (smart metering). Standards in these vertical areas will be helpful, but do not address the critical issue of interoperability across platforms.

The strategy’s effort is spread across sixteen diverse activities, and it misses the main point. By helping to improve and grow the global digital market, the Commission can give Europe a more prominent part in it, and improve the position of European businesses. Digital platform standardisation is a new direction that will lead to market change, and Europe should use this to advantage.

Chris Harding is Open Platform 3.0™ Forum Director, The Open Group

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