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Driving Digital Europe on Kroes control

Stuart Lauchlan Profile picture for user slauchlan June 24, 2013
The biggest ever open trade agreement between the US and Europe is looming. Meanwhile the European Commission wants to see the US buck up its ideas on various digital market fronts. Time for some more diplomacy in action?

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Kroes missile?

If you live in Europe, the actions of Neelie Kroes will have a direct impact upon you.

If you live outside of Europe - particularly in the US - the actions of Neelie Kroes will have an indirect impact on you.

In short, Neelie Kroes is a woman to whom everyone must pay attention.

Kroes is the European Commission's Commissioner in charge of the Digital Agenda. Her remit includes telecommunications policy, the prospect of a pan European cloud computing strategy and basically all things to do with digital policy.

Her proposals in some directions have rattled cages. Take for example, her insistence on the need for the pan-European cloud computing policy.

She's antagonised the UK Cabinet Office with a frankly patronising reaction to the national G-Cloud programme when she said:

“We need to think European. If we stick to a national approach with national rules, we will constrain the Cloud to national borders. We shouldn't limit our ambition like that. Only with a European approach can we find economies of scale, with benefits for Cloud providers and consumers alike.”

That brought a firm slap down from the UK's Chief Technology Officer Liam Maxwell, who declared the proposals to be:

"a tremendously retrograde step…It will enable the oligopoly that has driven IT for many years to be able to police the Cloud. Only they will have the ‘certified’ Cloud provision. Consequently governments will sleep-walk into buying from them, not just here but across Europe.”

Ouch! That battle will be fought for many years to come.

Elsewhere perceived nationalism  has set off alarm bells in the US where cloud services vendors already cast suspicious eyes over Europe's data protection and data transfer legislation that many regard as an de facto trade barrier to lock out non-European firms.

To date those rules have been more honored in the breach than the observance, but nothing that's coming out of Brussels suggests any lighter touch will be formalised any time soon. In fact, quite the reverse.

Special relationship

Kroes meanwhile talks up a future with increased US and European co-operation, powered by the shift towards a global digital economy. Recently she addressed the American Chamber of Commerce's EU (AmCham EU) conference on just such a theme when she stated:

"The EU and the US are the world's two largest economies, together representing over half the world's GDP; and they are among the most open. Our trade relationship already amounts to 2 billion euros a day, and sustains 15 million jobs. In 2012, US investments in Europe amounted to 200 billion dollars: US companies generating welcome jobs and earnings in Europe. But my message is simple: our relations can be even more beneficial if we give priority to the digital economy."

AmCham EU says that it speaks for US companies committed to Europe on trade, investment and competitiveness issues and aims to ensure a growth-orientated business and investment climate in Europe. It also claims that aggregate US investment in Europe totalled €1.9 trillion in 2012 and directly supports more than 4.2 million jobs in Europe.

Ready to deal with Europe

And there's more to come. In his State of the Union address earlier this year, US President Barack Obama  called for a free trade agreement between America and the European Union, something which is soon to be enshrined as the Transatlantic Trade and Investment Partnership (TTIP).

TTIP would be the biggest trade pact of all time, creating a free trade bloc reaching from from California to Romania and representing half the world’s total economic output.

So now is not a good time for anyone on either side to start to feel rattled in any way.

And I'm not entirely convinced that beneath the smile Commissioner Kroes is necessarily helping much.

The three things in the one issue

Kroes says she is concerned about what she calls "one issue". That 'one' issue is "things like regulation, standards and public procurement".

Insisting that she doesn't mean that the same rules need to be applied everywhere, she did advise her US trade audience that there needs to be more communal thinking among regulators. She also praised the US single market:

"American operators can serve 300 million citizens while working under one set of rules. Whereas over here, we have a tangle of twenty-seven different systems. And that's a headache for operators who want to think big and compete globally."

But you're not perfect, she advised them, ticking off the US telecoms market as closed to outsiders:

"The EU telecoms market may be too fragmented, but it is certainly competitive. In the States, an effective duopoly makes life hard for new entrants, if not impossible. And rules like equity caps or unequal access to spectrum and networks are outdated, and have no place in a truly open market. The result isn't just unfair competition: it means less choice and a worse deal for Americans. Opening up would serve all our interests."

On the subject of standards, she acknowledged:

"New standards can sometimes mean new trade barriers; the opposite of what we're trying to achieve."

That's something she might care to bear in mind herself, but she remains adamant of the importance of driving standards in areas such as cloud computing.

Finally she criticised the what she called the "many restrictions" on US government procurement below national level.

"That matters for ICT – because public authorities are big buyers of new digital solutions. Innovations like the cloud could support them, make public services more integrated, and save tax dollars. But to benefit, those public bodies need the widest possible choice of cloud suppliers."

Divided by digital thinking?

OK, so the message to the US from Europe via Kroes: open up your markets, let us in to bid for your government business more easily and lets collaborate over standards.

One can only imagine the response from large tranches of the mainstream US capitalist hierarchy to that shopping list, especially when there was little in Kroes' address about how she plans to make it easier for US firms to do business in a single European market.

Shameless piggy-backing

But the Commissioner wasn't finished yet, not when there was a chance to ride the PRISM bandwagon. She told delegates:

"Our understanding of privacy is fundamentally changing in the digital age. The rules we have for guarding it have to change too.

"That motivation applies to many situations – even those that might seem different on the surface. From the EU’s reform efforts, to the Obama charter supporting a Do Not Track standard, to your Patriot Act, and now the allegations regarding the PRISM programme.

"I get frustrated when privacy is seen merely as an irritant. Like most Europeans, I see privacy as a fundamental right."

As one might assume do many Americans, of course, even if the implication here is that somehow Europe is operating from a higher moral ground.

So, add to the shopping list of demands the following:

"The US, as a trusted partner needs to be more transparent with Europeans about what has been going on. And it should allow American companies to be more transparent with their customers and potential customers.

"If the US government doesn’t choose this course, it will undermine trust in new digital services, with the risk that users will abandon them or never join the digital ranks."

And in a shameless piece of opportunistic piggy-backing for one of the Commission's pet policies, she added:

"Let’s not be naïve. The PRISM debate will definitely increase calls for a European cloud, with a range of possible consequences for American companies."


So, are you listening Oracle,, Google, Facebook et al? Get the message?

Neelie's a bit narked off and wants to see some change.

Frankly I'm hugely suspicious when the administration in Brussels decides it's time to legislate on some hitherto uncolonised area of life.

Even more so when it centres not on  the mythical straightening bananas initiative,  but on something as vital as a Digital Europe and the potential impact on transatlantic cross-market trade and investment.

It's as though the starting assumption is that nothing can really work unless there's an EC working party issuing directive and guidelines and generally throttling the life out of it with red tape.

There's a lot that needs to be done to create a powerful Digital Europe and the Commission is encouraging some of that.

For example, the emphasis on super fast broadband infrastructure is entirely be commended and a push from the centre on that would be most welcome.

But in other areas, such as the proposed pan-European cloud computing strategy, I really wish Brussels would take a big step back. Meddling in areas such as certification and contracts isn't really tackling the big issues.

What we do need to address is a more realistic data protection regime across Europe that recognises the free flow of data across the internet rather than out-of-date legislation that calls for in-region or even in-nation data centres.

We must accept for now the reality of a cloud computing market where the dominant players are American in origin and not seek to put roadblocks in their way. I'm all for growing a European cloud computing industry but you don't do that by trying to hold back the established market leaders.

Of course I'd love to see more European companies cracking that notoriously difficult US market. It is possible to do so: we've seen SAP do it spectacularly. In more recent times, we've watched as UK cloud champion Huddle pushes its way into the US federal computing market with some success.

And yes, the US regulators and government could make it easier for Europeans to do business over The Pond.

But I"m unconvinced that addressing an audience of companies pumping investment into Europe and issuing what is effectively a list of demands to change their ways is really the most diplomatic way to go about it.

There is much that is good and well-intentioned in the European Commission's Digital Agenda and there is much that is downright dangerous.

A watchful eye needs to be kept on all developments in Brussels - and not just by the Yanks.


 Disclosure: At time of writing, SAP is a premium partner of diginomica. 

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