Shaping a New Digital Europe
By Javier Fernandez-Samaniego*
In February 2020 the new European Commission presented its “Shaping Europe’s Digital Future” – a strategic document with an ambitious objective of positioning Europe as the world leader in the new data economy and trustworthy artificial intelligence (AI) systems. Such an avid strategy is a clear antidote to the frustration with the secondary role that Europe has been playing in a game dominated by Silicon Valley and recently also by Shenzhen. The entire proposal rests on the need for Europe to endow itself with “digital sovereignty” and develop its capabilities independently. Although it is underlined that such European technological sovereignty is not defined “against anyone else”,. and remains open to everyone regardless of the country of origin, it is made clear that whoever does business in Europe must respect its “social model”, rules and standards.
The Commission considers that the strong protection of its rights and fundamental values and leveraging its regulatory power is actually an important ally in shaping its digital future. Europe’s success in making The General Data Protection Regulation (GDPR) an international standard to follow only reinforces this idea. What Europe has ahead now is building a new-generation infrastructure, the imminent deployment of 5G, and a whole series of reliable and energy-efficient cloud computing projects where it can begin to apply its new policies.
While during the pandemic the fundamental principles of European competition policy – such as the prohibition of State aid (Article 107 of the Treaty) – have been questioned, on June 2nd the European Commission (following the recommendations of the “Cremer Report”commissioned by Commissioner Vestager) announced new reforms in the existing competition rules to oppose the alleged dangers caused by the dominant or incumbent platforms (i.e. the “Big Techs”). According to the Commission, it is practically impossible to compete with the big platforms firstly given their considerable size (scale effect), secondly because of the network effect they generate and lastly because of their extraordinary ability to collect and use huge amounts of data for their own benefit. Besides, the existing competition tools (multi-million dollar fines included) prove to be ineffective.
To confront the “new risks”, the Commission suggests a three-pillared strategy. Firstly, a rigorous and continuous application of the current competition rules against cartels and anti-competitive agreements and abuses of a dominant position (Articles 101 and 102 of the Treaty), including the use of p interim measures and restorative remedies, where appropriate. Secondly, the possibility of using a new competition instrument (so-called “NCT” or New Competition Tool) to address the alleged “structural problems” in the markets that cannot be dealt with effectively with the existing competition rules. Lastly, the approval of a possible ex ante regulation of digital platforms that includes additional requirements for those that play a gatekeepers role through a new regulatory instrument the Digital Services Act or “DSA” that replaces the European 20-year old e-commerce regulation.
The rules of e-commerce applied around the world are based on the principle of exemption of responsibility of intermediary services that are limited to be “mere conduits”, “hosting” or “caching” are now being scrutinized with the objective to foster competitiveness, defy fake news, illegal content, and products circulating on the web, etc. However, any amendments to the existing regulation must be carried out with must caution. The “hosting defense”, for instance, had allowed the birth of thousands of SMEs operating online. A new regulation not aligned with the rest of the world could mean a disadvantage for Europe in comparison to technological powers like the United States and China and could only weaken Europe’s position since, ironically, the more complex marketplaces become, the less space there remains for SMEs and start-ups to share with the giants.
The public consultation on both tools, NCT and DSA, is open until September. Europe must not be tempted to protectionism that, in the end, only worsens the situation instead of mitigating it and stop being the shooting location for the film as one former Minister of Foreign Affairs of Spain put it recently, aspiring to prevent the two tech blocks from petrification.
Javier Fernandez-Samaniego is the Managing Director of Samaniego Law, an alternative iberoamerican law firm specializing in dispute resolution and technology law, and Foreign Legal Consultant of The Florida Bar. For additional information, please follow this link.