BRUSSELS—The European Union unveiled a signature plan to unite the region’s fragmented online markets and crack down on possible abuses by U.S. Internet firms, a move policy makers hope will boost the economy and help spawn Internet giants to rival Google Inc. and Facebook Inc.
The plans, six months in the making, are a cornerstone of efforts by the EU’s recently appointed executive arm to jump-start growth. They contain 16 initiatives ranging from an overhaul of the region’s telecommunications rules to harmonized copyright and tax regimes to cybersecurity and even better parcel delivery.
ENLARGE Crucially, the plans call for several major inquiries into possible abuses by U.S.-based Web companies. These include a “comprehensive analysis” into the role of online platforms such as search engines and price-comparison websites, which the EU worries may be abusing their market power, and a previously signaled probe by antitrust regulators into whether Internet commerce firms such as Amazon.com Inc. are restricting cross-border trade.
While the plans stop short of new regulations for Internet companies, Günther Oettinger, the EU’s powerful digital commissioner, stressed that such a move was still on the table, also in terms of the way online companies handle illegal content.
“If we’re going to have European legislation in this field, we need analysis,” Mr. Oettinger said at a news conference. The commissioner previously spoke of the need to regulate Internet platforms in a way that allows European firms to overtake the dominant U.S. operators, and his office produced a blueprint for platform regulation in February, according to a copy seen by The Wall Street Journal.
Technology firms cautioned against heavy-handed new rules, which they said could constrain Europe’s ability to attract technology companies and to develop its own.
“Brussels appears poised to put government officials in charge of how hugely popular online services are designed and implemented” without any evidence they are harming consumers, said Dean Garfield, president of the Information Technology Industry Council, a lobby group.
At the heart of the project is a determination to fight back against the dominance of the Web by U.S.-based companies. Top EU officials have warned that European firms are lagging behind in a critical sector that is squeezing traditional industries one after the other.
Jean-Claude Juncker, president of the European Commission, the bloc’s executive arm, said Wednesday that the plans would “lay the groundwork for Europe’s digital future.”
“I want to see pan-continental telecoms networks, digital services that cross borders and a wave of innovative European startups,” Mr. Juncker said.
EU officials estimate the plans could add €415 billion ($465.28 billion) to Europe’s economy and create hundreds of thousands of new jobs, urgently needed in a region where unemployment exceeds 11%.
Market Talk
Copyright Reform Falls Short Says EU Digital Plan Critic
It didn’t take long for critics of Europe’s proposal for a single digital market to voice their concerns. Julia Reda, a pirate party representative in the European Parliament, says the plan falls “shamefully short” of any meaningful harmonization of the various copyright laws amongst the bloc’s 28 member states. “Simply introducing ‘roaming for Netflix’ will not end the discriminatory practice of geoblocking,” she says, referring to the practice of blocking off content by geographic locations. “People’s everyday online activities will remain mired in legal uncertainty–from sharing their own photos of public landmarks online to modern cultural practices like audiovisual quotation,” Ms. Reda adds.
Will Europe’s Digital Plan Scare Silicon Valley Giants?
Europe’s plans for a digital single market, AKA its plan to compete with Silicon Valley, has at its core a legislative push to regulate and subdue global tech firms’ currently dominating the European digital landscape. The hope is that by curtailing the likes of Google Inc. and Facebook Inc. through anti-trust and data protection laws, Europe can make the space to create its own versions of those Internet giants. But the U.S. tech giants are huge investors in European tech and spawn a lot of the innovation, employment and growth on the continent. “Raising the spectre of protectionism is likely to have a chilling effect on tech investment,” said Mike Weston, CEO of Profusion, a data consultancy firm.
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The digital single market “is a big deal” that “will add tremendously to [Europe’s] competitiveness in the long term,” General Electric Co. Chief Executive Jeffrey Immelt said in a speech Tuesday in Brussels.
“No serious investor believes Europe really cares about jobs if the rules are inconsistent,” Mr. Immelt said.
The EU also pledged to create “a level playing field” between Europe’s telecom operators and new challengers such as Skype and WhatsApp, which the operators have accused of competing unfairly.
Telecom operators welcomed the plans. “We commend the [EU] for its commitment to ensure fair competition and a level playing field,” Vodafone said in a statement. But it called for “a more ambitious timetable,” and urged regulators to allow more mergers between telecom operators.
The plans are some way from becoming reality. The European Commission, the bloc’s Brussels-based executive arm, must turn them into concrete legislative proposals that will be debated and modified by national governments and the European Parliament before being voted into law.
At the news conference, Mr. Oettinger repeated his criticism of U.S. Internet firms such as Google and Microsoft Corp. for the way they handle personal data. He said common European data rules would help address the problem.
“If you look at the [Internet] platforms they have in the U.S., national data rules play an increasingly reduced role, [it’s] possible to work your way around national rules,” Mr. Oettinger said.