The UK wants a single digital market in Europe – but is it realistic?
- Summary:
- Prime Minister David Cameron has launched a vision for an EU single digital market, which has some very wise suggestions, but can 28 member states agree to get there?
There are elements of the agenda that even hint at creating Europe-as-a-platform - digital components that are built and replicated for use across all countries. Which is very ambitious, considering that the UK hasn't even yet got its own government-as-a-platform strategy together.
We have also seen how co-ordinated efforts across Europe to come up with a cloud computing strategy haven't exactly been smooth sailing.
However, I don't think anyone would dispute that a single market is a good idea. Whilst the internet is pretty much a homogenous, single entity that (tries to be) neutral, the online European market is fragmented by different ideas and inconsistent regulation that can make consumption for consumers and operating for businesses very fragmented.
And the 'vision' that has been released this week highlights a number of benefits for a single digital market for Europe. For example, a single digital market could create €340bn in additional growth and savings of €100bn a year if all public procurement was online.
So what is being proposed? The UK is arguing that the “continent's patchwork of national markets and outdated legislation looks increasingly anachronistic” in the digital world, especially when comparing it to the United States. It wants the EU to take steps to create an open, flexible market with a regulatory framework that reflects the dynamic nature of the web.
Prime Minister David Cameron said:
As the digital economy expands there are more and more opportunities for companies across Europe to grow, create jobs and help consumers to secure a better deal. All too often however these opportunities are being stifled by burdensome regulations and differing national regimes. It is time to put this right by completing the digital single market once and for all and unlocking the growth that this market could generate.
For consumers, the UK wants content and subscription to content services to be portable across member states. For example, if you have a Netflix subscription in the UK, this should also work in Italy. And it should work in France. And in any other country you're in within the EU.
Also, prices for digital products and services should not change 'unfairly' on the basis of where consumers come from in the EU. The report argues that prices can change when it involves a sales tax, or a delivery cost, but not just because of the nationality or IP address of a customer. Equally, there should be no extra charge because an online retailer is in one member state and the card issuer is in another.
The UK is also proposing that roaming costs in Europe should be scrapped (which is already possible in some countries) and that public services should be available to use online. The report states:
By digitising services and requiring consumers to submit data less frequently, public services could be provided more efficiently and more securely for everyone.
Consumers should be able to use their digital identity to prove that they are who they say they are in a safe and secure way, confident that their data is protected when accessing online services in all Member States.
Where barriers prevent this also being available in the private sector, we should build on the existing regulation on digital identity to tackle these.
These tools have the potential to give consumers access to banking, transport and other services online without having to go through paper-based processes.
This is where I think the report is hinting at Europe-as-a-platform. The UK is already developing its own identity programme – called Verify – and I doubt it would want to use a 'Europe specific' one as well. I would put money on it offering the code to the rest of Europe to use, or require that alternate identity systems in other member states are build with open APIs for easy integration.
All makes sense. How easy this will be to do with 28 countries having their own vested interests, different languages and conflicting politics involved, remains to be seen.
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With regard to businesses, the UK is proposing a “one market, one online process”. For example, online businesses should register once to operate everywhere in the EU. It states:
- Registering a website domain name, with no requirement for a physical address in the country providing the name.
- Enabling companies to be formed within 24 hours, with the possibility to fulfil all company law requirements electronically.
- Registering to pay VAT on all e-commerce within the EU.
- Navigating national identity requirements through a secure, business-friendly, cross-border electronic identity process.
- Finding information on how to trade on-line in any Member State.
The UK also wants to 'champion competition', where it claims that the competition framework for the EU needs reassessing in the digital world. It states that “if, and only if, the economic evidence shows that there are unacceptable distortions of the market, then the Commission should of course consider all the remedies available to it”.
An open internet is absolutely essential to ensure the emergence of new and innovative business models. It's therefore vital to prevent operators from blocking or throttling rival services.
The UK wants to create a marketplace that supports challenger businesses.
The EU has a chequered history when it comes to dealing with online businesses challenging the norm – just take a look at the
The UK's plans also address the problem of tax in an online world. Online companies have been heavily criticised in the UK for not paying their fair of tax, due to being registered in domains that have a low tax threshold. The UK is proposing that digital businesses should pay the appropriate rate of tax on their profits in the countries where they generate those profits.
The plans also suggest a single point for VAT registration and a single cross-border VAT threshold below which businesses should not have to pay VAT or file a VAT return.
And on regulation, it states:
The internet allows start-ups to gain millions of new customers in a matter of months. This phase can make or break their business.
If we want European companies to compete globally, we need to support them when they’re growing. While innovative businesses are scaling up, the EU should lighten the load from regulation designed for bigger players.
All new legislative proposals should be innovation-friendly and subject to a digital stress test as part of their impact assessment. And the existing body of law needs to be reviewed to ensure it’s still fit for the digital age.
Finally, a single digital marketplace should also establish common definitions for off-the-shelf products and services, simple contracts that can be used cross-border by both businesses and consumers and technical standards that allow interoperability where it's needed.
Responding to the paper and the Prime Minister's statement, Antony Walker, Deputy CEO at techUK (a body in the UK that represents the technology industry) commented:
Today's vision from the UK Government is a welcome stepping up of the UK setting the agenda on the digital single market in Europe. The completion of the EU digital single market will create a large scale domestic market for digital products and services and will help the UK's innovative SMEs to reach scale. As stated in our techUK manifesto, the EU digital single market should be shaped by Europe's most successful digital economy – the UK."
That's why the tech industry can get behind UK Government taking an active voice in this debate going forward - the UK should be leading, not following, negotiations on the completion of the European Digital Single Market. All UK political parties must ensure that their MEPs are standing up for UK national interest of technology as one of the UK's key markets for growth and high-value job creation.
My take
However, it completely goes against how Europe currently operates. It's light touch, it's free market, it's low bureaucracy, it's agile, it's homogenous.
Can Europe really pull this off? I'm not so sure. The UK is definitely one of the leading nations in Europe when it comes to digital. Will it be able to convince member states and Brussels that this is necessary? Possibly. Will it be able to change the culture of the EU to get there? I just don't know.
What we are talking about here goes beyond a 'digital single market' – this is a new EU. Let's face it, most of us are working online, most of us use online public services if we can and most of us buy online. This is only going to be more true as the years go on. If a single digital market for Europe is created, that's going to be far more important than the offline market for Europe.
I'm just not sure we can get everyone on the same page...
