Categories: NewsNewsWhat's Hot

Europe’s Answer To Silicon Valley

After decades of tech dominance in California’s Silicon Valley – particularly by firms like Google and Facebook – it seems Europe is ready to make its move.

On May 6, the European Commission plans to release its proposal to gather all 28 EU member states into what it is calling a “single digital market.” Housed in the forthcoming marketplace will be Europe’s digital goods, capital, content and services.

The strategy is reportedly driven by American tech firms’ encroachment into areas that Europe has long considered its wheel houses: networking infrastructure, automotive and manufacturing. The industries together represent millions of European businesses and tens of millions of jobs.

However, while these business lines are central to Europe’s economic health, data released by the commission indicates that 41 percent of EU firms do not leverage digital technology at all. Commissioners feel that now – as the IoT is moving more objects onto the Web and allowing them to perform essentially autonomously – is the time to encourage innovation in European firms, push them toward the digital age and hope that said action is able to add speed and strength to what has been a sluggish recovery in much of Europe since 2008.

“Barriers that do not exist in the physical single market are holding the European market back,” the commission’s strategy paper says, a draft copy of which was seen by The Wall Street Journal. The report further finds that a single digital market could add as much as $365 billion to the European GDP, create 3.8 million jobs and potentially bring the cost of public administration down as much as 20 percent.

“[The aim is to] restore Europe as a world leader in information and communications technology.”

The plan is itself multi-phased. Phase 1 is to lower the barriers to cross-border activity online. Those barriers presently include differing contract law, taxes, consumer protection and copyright laws among member states; interoperable and uncompetitive package delivery schemes; and complicated VAT rules and dispute resolution procedures. The solution offered by the commission is a single audit for companies that sell across EU borders. The goal is to make it straightforward enough for most businesses to become pan-European within one month, and to be able to do all of this online through electronic signatures.

“The message Europe is sending its entrepreneurs now is: stay at home,” said Andrus Ansip, the European Commission’s vice president for the digital single market, according to WSJ. “Europe has a potential customer base of 500 million people, whereas the U.S. has 350 million, but with 28 different laws, technology firms can’t grow in Europe.”

The next phase of the strategy regulates a level playing field for companies and services in the same market. While the report did not call out any firms by name, it did note that search engines, app stores and social media have “rapidly and profoundly challenged the status quo” and have grown exponentially. The paper then outlines a review process for firms playing in these areas that will seek to find and eliminate potentially unfair terms of conditions, unfair practices, non-transparent pricing policies and search results, as well as their use of personal data for profiling and targeted advertising.

Despite this regulatory focus, Ansip told The Wall Street Journal that the digital single market strategy “in no way” aims to limit the progress of U.S. tech firms in Europe.

The digital market strategy also calls for big changes to the European telecoms market. Specific changes include an update to radio spectrum allocation auctions. Those auctions make it possible for telco operators to roll out mobile Internet like fourth generation wireless networks, or 4G. The commission will recommend that while revenues from spectrum sales stay with member states, the licensing conditions, like time limits on auctions and coverage requirements, should be harmonized across the EU in an attempt to stop over-inflated pricing in some countries (which is in turn hampering development and leaving southern and eastern member states with 3G and in some cases 2G connections).

Telco reform will also potentially expand into increased regulation of over-the-top communications services like Facebook’s WhatsApp. Various European operators have pushed for this as revenues from SMS and voice calls decline and consumers move by the millions to these services. Facebook has noted that over-the-top messaging brings significant revenue to telcos as it pushes users to increasingly larger data plans to support their messaging needs.

The commission’s goal is to see this strategy put into place over the next two years. The goal at the end is to have a single European marketspace to counterbalance and compete with Silicon Valley based firms.

Get our hottest stories delivered to your inbox.

Sign up for the PYMNTS.com Newsletter to get updates on top stories and viral hits.

——————————

New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

Recent Posts

Agora Services Debuts New Tools For SMB Banking

Challenger bank Agora Services wants to address challenges with banking for small businesses with a new solution called Agora SMB,…

2 hours ago

Google Almost Done With Transition To SAP Ariba Network

Google's transition to SAP Ariba's cloud-based services has a completion date set for Aug. 24 after multiple waves that began…

2 hours ago

Fed Moves Ahead With FedNow Despite Objections

Not everyone favors the Federal Reserve Board’s launch of its settlement service designed to eliminate the three-day check clearing and…

2 hours ago

Pelosi, Mnuchin Call For Reopening Stimulus Talks

Weeks of failed negotiations on pandemic-related aid has led to House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin, representing…

2 hours ago

Bitcoin Daily: S. Korea To Use Blockchain To Collect Highway Tolls; Polish Financial Watchdog Warns Of Fake Crypto Scams

South Korean highways could see blockchain-based toll booths before the end of the year, according to a report from Crypto…

3 hours ago

CHAMPS Group Purchasing Works With Procurement Partners On Smoother P2P Services

CHAMPS Group Purchasing is partnering with Procurement Partners, which works in procure-to-pay (P2P) solutions, to provide a new service for…

3 hours ago