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Digital Single Market: half-time

11th May 2017


Here's what you need to know

 

What happened?

  • After many (potentially orchestrated) leaks, the European Commission published its review of President Juncker's landmark Digital Single Market (DSM) Strategy on Wednesday.
  • The 16 areas for action outlined in the original programme of May 2015 have led to the publiaction of 35 legislative proposals. 
  • The EC claims that one of the 35 initiatives has been adopted thus far; a direct rebuff of the European Parliament and EU Council, which are taking their time to review the files.
  • A Commission official has indicated that the adopted file to which the review refers is the content portability proposal, although it still awaits a plenary vote in the EP on 18 May. The EC could also be referring to the abolition of roaming charges which was adopted but did not technically fall under the DSM strategy. 
  • Aside from highlighting some successes and urging the other EU institutions to break deadlocks and make headway, the review sets the priorities for the second half of the European Commission's mandate until May 2019. 

Benchmarking the review against the 2015 strategy: Three new priorities

  • Cybersecurity: The revised EU cybersecurity strategy due in September will include a roadmap for action around FDI review processes, economic sanctions for state-sponsored espionage and hacking, and value chain liability.
  • Data economy: Developing a strategy and policy framework for an AI economy and clarifying legal issues around the Internet of Things (including data ownership and product liability) have climbed the political agenda.
  • Platforms: Moves to regulate how online platforms deal with illegal content on their website are gaining traction with guidance expected on notice and take down action at the end of the year and potential legislative action through the IPRED reform. 
  • DSM files concluded and under negotiation
    • Roaming charges & cross-border portability: the poster children of the DSM review. After all, 34% of Europeans travel across borders in the EU at least once a year.
    • Telecoms reform & 5G rollout: The recast Electronic Communications Code and the EU telecoms regulators' reform are well underway, with a political agreement on the EECC foreseen in 2018. Resources will also be pooled to advance 5G rollout, but telecoms companies fear that the abolition of roaming charges will leave an un-pluggable revenue gap and thereby hinder investment in high-capacity networks. 
    • Barriers to e-Commerce: Legislative proposals on geo-blocking, parcel delivery, cooperation between consumer protection authorities, and contracts for the supply of digital content and the distance sale of goods remain in Parliament and Council deadlock. Balanced against the platforms and cybersecurity debate, these also appear to have dropped in priority somewhat.  
    • Privacy & data protection: The GDPR implementation deadline is coming closer (May 2018), which adds even more pressure on the EU institutions to agree on the new e-privacy Regulation (proving to be a tough cookie - pun unavoidable). 
    • Audiovisual rules covering OTT players: The CULT Committee in Parliament is trying to accelerate its negotiations with the Council, so an agreement by the end of the year is possible. 
    • Copyright reform: EP Rapporteur Therese Comodini-Cacchia published her copyright report amendments just in time for the review. The reform remains one of the most contested and bitter battles of the DSM, protracting speedy progress. 
  • The way forward: Fair, open and secure digital environment
    • Online platforms: There are still no plans for horizontal platform legislation, but sector-specific regulation (including in the much-delayed reform of the IPR Enforcement Directive) and additional guidance on platforms' responsibilities vis-à-vis illegal content are in sight. 
    • Data economy: The Commission will continue to investigate policy options to open up access to public, publicly-funded and public-interest data, and a legislative propose to enhance the free movement of data proposal will finally be published in Q4. Infringement procedures are also on the horizon for Member States imposing unjustified data localisation restrictions. 
    • Cybersecurity: A centrepiece of the DSM review are plans to revise the EU's 2013 cybersecurity strategy by September, and a new EU-wide ICT certification and labelling scheme targeting IT manufacturers producing IoT devices.
  • Upcoming initiatives: Digital transformation
    • Intellectual Property: IP is a mere by-line in the DSM review (with a focus on standard essential patents), but political intelligence suggests that the IPR Enforcement Directive will indeed be reformed, with a proposal due in Q4. 
    • Digital infrastructure: The EU wants to update procurement rules to enhance uptake of exscale supercomputers. 
  • EU Digital Single Market in a global context
    • The Commission will devote more resources into granting adequacy decisions for key trading partners to enhance data flows. That said, a concept paper on data flows in trade agreements is stuck in gridlock somewhere between the Commission's Justice, Connect and Trade Directorates. 
    • Following Germany, France and Italy's concerns about foreign investment in national tech companies, the Commission also commits to investigate "how to monitor" foreign acquisitions of strategic European assets

New initiatives proposed

  • A potential proposal regulating unfair contractual clauses and trading practices in platform-to-business relationships to be published by the end of 2017. 
  • Guidance on liability rules for platforms and notification and guidance on removal of illegal content - first results of these efforts can be expected by the end of 2017.
  • A proposal on the free flow of data can be expected in autumn this year.
  • An initiative (unclear if soft or hard law) on accessibility and re-use opportunities for public and publicly funded data. Watch out, the Commission also wants to look into private data they see relevant for the public interest.
  • Publish an approach towards product liability in case of damages brought along by data-intensive products. #IoT
  • Further investigation of the issue of open access to data.
  • An updated cybersecurity strategy to be published by September this year.
  • Development of cybersecurity standards for products including certification and labelling.
  • A "Digital Opportunity" education scheme enabling cross-border traineeships in the digital realm in 2018.
  • A comprehensive mobility package to help the EU economy drive digitalisation by Spring 2017.
  • Update existing company law to facilitate use of digital solutions in companies.
  • A Communication on e-health before the end of 2017.
  • A legislative proposal regulating procurement procedures for exascale computing and data infrastructure. 


Next steps The Commission's calls for the swift conclusion and implementation of ongoing DSM files is likely to irritate some in the Council / MEPs who have been vocally frustrated with Commission delays and the tabling of huge ‘packages’ of reforms in one go. The calls are therefore unlikely to dramatically accelerate the legislative process as it stands today.   

Business impact Businesses can expect a second wave of EU digital proposals now and mid-2018. In the three new priority areas, policy trends are pretty clear: more liability requirements for platforms with regards to fake news and the likes, more obligations for Member States to up their cybersecurity game (which implies risks and commercial opportunities for software and hardware producers in equal measure), and legal / policy measures to liberalise data flows and reduce the compliance burden for companies that comes with localised storage requirements.

The business community' reactions to the review were mixed. Copyright advocates slammed the reform (but that's old news), while telecoms association ETNO cautiously welcomed the update and reiterated its hopes for the new Electronic Communications Code. Platform association EDiMA announced disappointment at the plans to overhaul B2B relations between platforms and business partners but carefully welcomed guidance on how companies should act when faced with illegal content on their websites.  

In the European Parliament, the Socialist and Democrat group gave the Commission a 7/10 and is hoping for digital skills and social aspects to come through more in the Commissions activities. The Conservatives group welcomed the proposal, while Green MEP Julia Reda criticised a lack of effort to advance the DSM strategy reforms and considers the European Parliament best-placed "to mend the holes punched into the Digital Single Market by corporate lobbying".  

The Grayling View While data flows, cybersecurity and liability are the key drivers of the  DSM review, other policy areas such as harmonised spectrum allocation and IP enforcement remain side notes in the review. This is likely an effort by the Commission to avoid drawing attention to areas where it is facing significant resistence from Member States and/or third-party lobbyists, or where it has not defined its direction internally yet. 

The review is ambitious and represents a huge scope of work to be done before the EU elections in 2019. In the context of Brexit, delicate relations with President Trump and huge challenges related to migration and EU security, pulling this off is not an easy task. 

 

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Contact us at NewTechnologies@grayling.com to subscribe to the Grayling EU Digital Policy Team's bi-weekly newsletter, EU DIGITAL DIGEST.


Grayling Team

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