Commentary by Gabriella ATKINS
On 6th May 2015, the European Commission released its Digital Single Market Strategy (DSMS), a document designed to outline how the Commission was going to reach the European Parliament’s objective of creating a single digital market across Europe. The Commission argues this will inject ‘€415 billion per year to our economy and create hundreds of thousands of new jobs’. However, those in eager anticipation of a clear strategy as to how this will be achieved will be disappointed. The DSMS instead reads more as an acknowledgement of the current problems facing a single digital market and outlines areas for review and future reform.
The DSMS is composed of sixteen initiatives grouped under three pillars which will support a single market:
- Better access for consumers and businesses to digital goods and services across Europe
- Creating the right conditions and a level playing field for digital networks and innovative services to flourish
- Maximising the growth potential of the digital economy
A closer look at two of the Commission’s proposals will reveal the general flavour of the DSMS. Most of the proposals within the DSMS are articulated in a vague manner with very little detail as to how the aims are to be achieved. Firstly, the Commission proposes ‘to end unjustified geo-blocking’ and provides the unusual example of ‘car rental customers in one particular Member State may end up paying more for an identical car rental in the same destination’. Such an example is odd because one of the primary concerns with geo-blocking is with regards to the practice of denying consumers access to websites due to their location in another Member State. For example, trying to watch episodes on BBC iPlayer outside the United Kingdom, or videos on L’Equipe outside France. The DSMS is clear that such territorial assertions are ‘unjustified’ but they are rather vague on what is ‘justified’. The inclusion of ‘justified’ is probably to placate the intellectual property (IP) rightholders who believe that a releasing of restrictions of cross-border access to content would undermine their practice. In particular, the audiovisual sector is increasingly concerned by such intentions. The Commission is aware of this backlash, indeed at the Cannes Film Festival, Gunther Oettinger, Commissioner for the Digital Economy and Society, argued that the DSMS did not threaten the interests of the film industry. Unfortunately the distinct lack of detail in the DSMS means it is difficult to comment upon how methods to achieve an end to ‘unjustified geo-blocking’.
A second area where the DSMS’s vagueness is apparent is the proposal ‘to reduce the administrative burden businesses face from different VAT regimes’ with the establishment of a ‘common VAT threshold’. This proposal is clearly designed to rectify some of the problems encountered by businesses following the Commission’s January 2015 changes to the VAT regime which meant companies had to charge VAT in the buyer’s country, not their own. As a result, many small businesses were forced to register for VAT when they would not otherwise have had to and in turn many companies simply stopped trading when they encountered this obstacle. Clearly such moves are in opposition with the aims of a single market and the Commission has been forced to back-track. Furthermore, the Commission does not detail what the EU-wide ‘common VAT threshold’ will be. Companies which exceed this threshold will still have to deal with differing VAT regimes across the EU, a problem which will only disappear once all VAT systems and rates have been homogenised.
Ultimately, the DSMS represents an idealistic set of values which should be present in a single market – digital or not – but one has to question the EU’s ability to deliver on its dreams. In particular the deadline of ‘the end of 2016’ seems a little far-fetched. Furthermore, initiative sixteen proposes to ‘support an inclusive digital society where citizens have the right skills to seize the opportunities of the Internet’…all by 2017.