The #DigitalSingleMarket – lots of fanfare but no easy fix

For the very small part of the European population which lives in a country where they were not born, or is an expat for work, or which travels frequently to see business contacts or friends in other EU countries, yesterday’s slick PR launch by the European Commission of the #DigitalSingleMarket programme can make a big difference.

If fully implemented it could prevent, for example, a French expat about to embark on a new life in Germany from losing their complete iTunes library when they move. It could in theory allow Brits to watch the BBC’s iPlayer in the rest of the EU without resorting to tricking the internet into believing they are in the UK by changing IP addresses.

But for the vast majority of the EU population the much-heralded strategy from Brussels will make little or no difference to their daily lives. They may shop online but they will never buy cross border.

The big question though is whether it can help drag Europe’s moribund economy out of virtual recession. This is, after all, the claim from Brussels. It’s going to create €415 billion in extra growth they say – that’s more than double Greece’s entire GDP.  It’s the main reason why they are acting they say.

I’m sceptical. But I would love to be proven wrong.

After all, the big (analogue) Single Market Programme launched in 1992 and aimed at completing the integration of the EU single market was judged by most commentators to be quite successful, with real gains in GDP in a number of EU countries, leading to more employment and investment.

If Juncker, Ansip, Oettinger and their colleagues can inspire a similar movement to break down barriers to trade and services in the digital economy perhaps they can make a real difference.

Yet there are many vested interests.

In the same way that pharmaceutical companies sell medicines on national markets at different prices rather than to the EU at an EU price, why would Apple accept to have one price for the EU and portability of iTunes libraries across EU borders without exacting some cost? Prices for consumers are sure to rise in the short-term, no?

Of course it is not correct that sending a parcel from Lille to Marseille costs less than sending it from Lille to Brussels, just because it crosses a “national” border. But surely postal operators will shout loudly that they are also burdened by national regulation to supply some services in their own countries below cost for social purposes.

So what may appear as a nice, shiny, well publicised policy from the EU has many roadblocks ahead. And the reality is that, 23 years after the single market programme launched by Jacques Delors, the analogue single market remains incomplete. Try as they may, the EU has not managed until now to prize energy policy away from the member states.

Yes, goods and capital move much freer than they ever did. But cross-border services are still hampered. And that is not to even touch labour mobility, which is threatened not just by regulation but by the politics of fear in some member states.

All of this is interesting to EU nerds and political followers. But the real story of the #DigitalSingleMarket is the untold one.

It is about how Europe fears falling behind the US. About how it fears losing control, losing “digital sovereignty”. Commissioner Oettinger even talked about needing this strategy to ensure “digital independence”.

So lurking behind some of the eye catching initiatives on reviewing VAT rules and investing in digital literacy are precursors of the big battle to come between the EU and the US.

Whether you think it true or not, there are plenty of European politicians who would like to curb what they perceive as the omnipotent power of a small number of American tech firms, the likes of Google, Amazon, eBay.

Rather than delivering economic growth many believe such an approach would stifle it and that Europe should, rather, seek partnerships and work together with the leading digital companies.

The EU is not alone in setting out strategies to reduce “dependence” on US tech firms of course. China has done it. Russia has done it.

And so the real political battle in the digital world is not so dissimilar from the analogue world. How to make oneself stronger in the face of competition from abroad. The EU is following its tried and tested model by saying internal barriers need to be broken down to make it stronger externally.

It’s a powerful strategy as long as it doesn’t become too introspective. And too slow. Because otherwise technology and the rest of the world will have moved on.

 

*Note: This article was written by our Senior Partner, Tim Price. You can connect with him on Twitter @pricetim or via Linkedin.

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