EU Sets Out Further Plans to Develop its Data Economy

This week, the European Commission finally unveiled a series of long-awaited digital policy proposals, marking the end of a busy first quarter for EU policy-makers working on completing the Digital Single Market (DSM), a political priority for the Juncker Commission. Many of the proposals published as of Wednesday highlight the EU’s objective to shape the current and future global policy debates surrounding data-driven innovation. The Commission released the following: a Communication “Towards a common European data space”, which includes recommendations to increase scientific and private sector data sharing, and a review of existing legislation on how public institutions should open up data sets for re-use (‘Public Sector Information Directive); a European approach on Artificial Intelligence (AI); as well as initiatives to help in the digital transformation of health care.

At the same time, the Commission is also sending a strong message to those that currently drive such data-driven innovation i.e. online platforms, by publishing a Communication on fake news and tackling online disinformation and a Regulation on fairness in platform-to-business relations (P2B).

While most of these proposals include guidance documents, recommendations and self-regulatory measures, some of them propose concrete legislation, such as the P2B Regulation, and will be particularly important to businesses operating online.

The last couple of years have been a wake-up call for everyone: from the recent scandals that have shed light on how technology can be used unethically to the challenges that ‘disruptive’ business models have brought to the whole Internet economy, the political narrative in Europe around the need to “unleash the potential of the data economy to solve society’s challenges” has shifted. From the EU’s perspective, Spiderman’s famous quote (“with great power comes greater responsibility”) is more than ever the fundamental basis for policy-making.

The Commission’s initiatives published this week represent the EU’s attempt to strike this right balance: on the one-hand, Europe wants to boost access and use of data and better deploy AI-related technologies through increased R&D funding, skills training, etc., on the other hand, it wants to ensure, through targeted regulation, that technological progress is matched with the respect for fundamental rights and fair competition. A ‘carrot and stick’ approach which has been echoed by some EU leaders, including France’s President Macron who pledged to massively invest in AI at home, while taking a leading role on the digital taxation and fake news fronts.

But can the EU succeed in walking this fine line between encouraging innovation and effectively preserving the integrity and the sustainability of the online economy?

One if its main challenges will be to ensure consistency in policy-making, not just across the various DSM initiatives, but also making sure that Europe’s digital policy-making aligns with current EU laws and fundamental rights, as well as its political priorities for competitiveness and growth. Looking at most of this week’s initiatives, a lot of questions will need to be addressed, such as:

  • How does Europe effectively compete in the global race of AI when other regions of the world benefit from more permissible legal frameworks on the use of data, from anti-trust, to privacy and copyright rules?
  • Looking at other initiatives impacting platforms such as the recently proposed Commission Recommendation on measures to effectively tackle illegal content online, what do the various proposals mean with regards to the limited liability afforded to online intermediaries under current EU law (i.e. e-commerce directive)?
  • As the Communication on fake news targets “intentional disinformation” that is not illegal per se, how will online platforms effectively tackle such content while respecting fundamental rights such as freedom of speech?
  • How can ‘direct support to the news media sector’ as proposed in the Communication on fake news, be effectively quantified in the midst of two proposals being currently discussed and which will both affect the financing of the press? (i.e. the publisher’s rights in the proposed Copyright Directive vs. the proposed ePrivacy Regulation that will limit the use of online behavioral advertising, a key source of revenue for the media).
  • How does Europe plan to require “transparency” in situations where the ranking and/or displaying of information online is powered by algorithms, or assess the anti-competitive impact or the liability issues posed by such algorithms, without requiring disclosure of their source code, or at least part of it?

The above questions are just a snapshot of the key challenges European policy-makers face, and how much they are walking on a tightrope: how to solve critical problems posed by the fast-moving Internet economy without opening Pandora boxes that would result in unworkable and business-damaging regulatory frameworks. Success would place the EU at the forefront of policy-making globally, while failure would further increase the competitiveness gap between Europe and other regions, not just the United States, but also China, where the number of Internet giants keeps growing.

What is clear however, is that we are entering a new regulatory chapter, one that is likely to be pursued by the next European Commission and European Parliament after 2019: dominant technology players and online platforms will need to keep a close eye on what the EU will do to regulate the sector. The General Data Protection regulation (GDPR) was just the starter. The main courses are coming.