European Commission sets out ambitions for a Digital Single Market

Transcription

1 European Commission sets out ambitions for a Digital Single Market May 2015 The European Commission s Digital Single Market Strategy shows both frustration at the slow development of Europe s digital transition and a determination to be ambitious for the future: Europe has the capabilities to lead in the global digital economy but we are currently not making the most of them. Fragmentation and barriers that do not exist in the physical Single Market are holding the EU back. The Commission s aim is clear: to ensure that Europe maintains its position as a world leader in the digital economy, helping European companies to grow globally. The Strategy seeks to establish a European market in the new digital economies with free movement of goods, persons, services and capital, functioning as effectively as in the traditional economies. This to be built on three pillars: better access to digital goods and services for consumers and businesses across Europe; predictable conditions for investment, and a level playing field, for digital networks and innovative services; and maximising the growth potential of the digital economy. The Commission argues that this will require further harmonisation of laws at EU level to enable legal certainty, a level playing field and effective exploitation of new technologies, such as Big Data and cloud computing. Although there are also issues concerning industrial policy in the Strategy, the areas for specific legal change include legislative harmonisation on copyright, data privacy, media content regulation, telecoms regulation, e-commerce, liability of intermediaries and radio spectrum. It also focuses on the competitive dynamics of online platforms and the adequacy of competition law to address concerns in this sector. All of these are controversial areas, and Jean-Claude Juncker speaks of having the courage to break down national silos in telecoms regulation, in copyright and data protection legislation, in the management of radio waves and in the application of competition law. Tom Levine Partner Head of Telecoms UK - London Contact Tel tom.levine@allenovery.com 1

2 Copyright The Commission s emphasis is on removing barriers to cross-border access to copyright content, including portability of content into one Member State (eg an online video service) which was acquired in another, and even cross-border access to copyright purchased in another Member State. The final version of the Strategy (unlike earlier leaked drafts) specifically contemplates a review of the Satellite and Cable Directive to cover broadcasters online transmissions and to increase the possibility of cross-border access to broadcasts. The Commission does Media content regulation recognise that the business of creative audiovisual media is often based and financed on a model of territorial licensing, and that there is a tension here between respecting the value of creative rights and enhancing the European nature of the market. The Commission also flags the need to harmonise civil enforcement procedures for commercial-scale infringement, with a follow-the-money approach. See Intermediaries below. The Strategy contemplates extending the reach of media content regulation under the Audiovisual Media Services Directive to address the disparity between treatment of traditional linear broadcast, on-demand services, and new services and players in a market which has changed greatly since the Directive was introduced and subsequently revised. This could be part of the theme of levelling the playing field that occurs throughout the Strategy document not only aligning linear and non-linear content regulation, but even taking the harder step of bringing new audiovisual content services (potentially including non-eu providers) within the scope of EU regulation. We have seen how controversial this prospect of extraterritorial application has been in the context of the draft General Data Protection Regulation and can assume that it will be equally controversial in audiovisual media. Levelling the playing field in telecom services The Commission is straightforward about looking at ways to address the disparity between regulation of traditional telecom connectivity services (historically a sector subject to detailed and intrusive regulation) and new (unregulated) services which compete as substitutes for them (presumably voice, text and video services on over-the-top services). It is not clear whether any initiatives would take the form of less regulation for traditional telecom services or (more legally ambitious) seek to apply the EU regulatory regime to their OTT services, which may not be based in the EU. A less-mentioned area of regulatory disparity between traditional telecoms and new digital services is the 2

3 European Commission sets out ambitions for a Digital Single Market May 2015 application of the eprivacy Directive, which imposes strict controls on the manner in which telcos can (and in some cases must) store and use subscriber and traffic data. The Commission acknowledges that a review of the application of the eprivacy Directive can only realistically be considered after the new EU General Data Protection Regulation is settled. In aiming for a level playing field, the Commission refers to ensuring a high level of data protection for all, rather than suggesting a reduction in the data privacy responsibilities of traditional telcos. The prospect of extraterritorial application of the EU s data privacy rules to non-eu-based OTT providers has already proven controversial. The Commission notes the unfinished business of the Telecoms Single Market package, which was not completed before the end of the Barroso Commission. Implementing the path to removal of mobile roaming surcharges within the EU and imposing harmonised rules for net neutrality, which were the major features remaining after the political negotiations on the Telecoms Single Market package, are the Commission s priority. While the EU s proposals have been under negotiation, the FCC s u- turn on net neutrality rules has caused a great deal of controversy in the U.S. telecoms industry and it will be interesting to see whether that controversy affects the EU s proposed net neutrality harmonisation. The Commission grasps the nettle of spectrum allocation, stating that national spectrum management results in widely varying conditions (eg different licence durations, coverage requirements). The absence of consistent EU-wide objectives and criteria for spectrum assignment at national level creates barriers to entry, hinders competition and reduces predictability for investors across Europe. It points specifically to the uncoordinated and incomplete release of the 800MHz digital dividend spectrum, which is particularly valuable for 4G. EU vs national spectrum management has been a key issue for Brussels for some time, and carefully defended by national governments and regulators. The Commission acknowledges the significance of national revenue derived from spectrum auctions, but insists on imposing a measure of harmonisation on future spectrum releases. Although a rather technical area of the Strategy document, spectrum allocation policy has significant implications for the telecoms industry and arguably for the competitiveness of the digital industries which increasingly rely on mobile data services. Online platforms The Commission indicates an intent to take more seriously the market power developed by online platforms in the digital economy. The concerns raised include: lack of transparency as to how [platform operators] use the information they acquire, their strong bargaining power compared to that of their clients..., promotion of their own services to the disadvantage of competitors, and nontransparent pricing policies, or restrictions on pricing and sale conditions. This can be seen against the background of the more assertive stance of the Commission towards platform providers, such as Google and its comparative shopping service. The Strategy document even goes as far as to suggest that competition law alone may not be sufficient to address these concerns over market power, implying some level of industry-specific or ex-ante regulatory environment.

4 Intermediaries The liability of online intermediaries has evolved since the introduction of the e-commerce Directive, but the Commission states that there is still a lack of clarity that it intends to address. It comments that it is not always easy to define the limits on what intermediaries can do with the content that they transmit, store or host before losing the possibility to benefit from the exemptions from liability set out in the e-commerce Directive, suggesting that the functioning of mere conduit defence may need to be reviewed. Although copyright infringement is mentioned as just one example of illegal content, as noted above the Strategy specifically anticipates a follow-the-money civil enforcement approach to commercial-scale infringement. Intervention in contractual arrangements The Strategy document notes a number of areas where markets have not developed as effectively as they should, and proposes different types of legal intervention, from facilitating or imposing technical standards to requiring standards of liability in service contracts. In terms of standardisation and operability, the Commission is concerned that when industry is left to develop its own standards, there is a risk of fragmentation undermining innovation, or at least that European industry is missing out: Currently, industry stakeholders decide bottom-up in which areas to develop standards and this is increasingly taking place outside of Europe, undermining our long-term competitiveness. We need to define missing technological standards that are essential for supporting the digitisation of our industrial and services sectors (eg Internet of Things, cybersecurity, big data and cloud computing) and mandating standardisation bodies for fast delivery. Beyond imposing or encouraging the use of technical standards by industry, the Commission hints at more significant intervention in contractual relations, to address problems in the market for cloud services in Europe, in particular the portability of data between cloud providers: However, contracts often exclude, or severely limit, the contractual liability of the cloud provider if the data is no longer available or is unusable, or they make it difficult to terminate the contract. This means that the data is effectively not portable. The Commission proposes a European Cloud Initiative with a specific mandate to address switching between cloud providers, and the terms used in the cloud services business a notable adventure into the realm of private business contract terms. The primary area of intervention in contract law concerns the Commission s intent to harmonise even further the laws governing the relationship between online sellers and buyers, with mandatory and harmonised terms for matters such as returns of defective goods and for online purchases of digital content. The proposals would allow sellers to rely on their national laws to govern relationships with buyers, encouraging domestic traders to sell across EU borders, with buyers protections in the form of mandatory contract terms for online trading. This comes at the same time as Commissioner Vestager launches a competition inquiry into the e-commerce sector in the European Union. From the amount of detail in the Strategy on facilitating cross-border e-commerce, this seems to be an area of clear focus for the Commission.

5 European Commission sets out ambitions for a Digital Single Market May 2015 What next? While Vice-President for the Digital Single Market Andrus Ansip notes the Strategy is our starting point, not the finishing line, the Commission has set out a specific timetable over 2015 and 2016 for each of the initiatives, with targeted actions. This ambitious undertaking from a can-do administration will attract much discussion from Member States and other stakeholders. Industry players should be ready to make the most of any opportunities to engage with the Commission on its initiatives. Allen & Overy LLP One Bishops Square, London E1 6AD, United Kingdom Tel Fax Allen & Overy maintains a database of business contact details in order to develop and improve its services to its clients. The information is not traded with any external bodies or organisations. If any of your details are incorrect or you no longer wish to receive publications from Allen & Overy please epublications@allenovery.com. In this document, Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP s affiliated undertakings. Allen & Overy LLP or an affiliated undertaking has an office in each of: Abu Dhabi, Amsterdam, Antwerp, Athens (representative office), Bangkok, Barcelona, Beijing, Belfast, Bratislava, Brussels, Bucharest (associated office), Budapest, Casablanca, Doha, Dubai, Düsseldorf, Frankfurt, Hamburg, Hanoi, Ho Chi Minh City, Hong Kong, Istanbul, Jakarta (associated office), Johannesburg, London, Luxembourg, Madrid, Mannheim, Milan, Moscow, Munich, New York, Paris, Perth, Prague, Riyadh (associated office), Rome, São Paulo, Shanghai, Singapore, Sydney, Tokyo, Toronto, Warsaw, Washington, D.C., and Yangon. Allen & Overy LLP This document is for general guidance only and does not constitute definitive advice. CO: