Stakeholders Wary of Possible EU Internet Platform Regulation

The European Commission will consider possible regulation of online platforms such as search engines and social media as part of its digital single market (DSM) strategy, it said in an April 21 leaked draft document, an updated version of which was given to us Thursday. Telecom operators increasingly compete with other services that users substitute for traditional e-communications services, such as VoIP, "without being subject to the same regulatory regime," the EC said. Online platforms are playing a more central role in social and economic life, raising concerns about their growing market power, it said. The core issue in the DSM strategy is whether Europe's current "ex ante" regulatory regime will be extended to over-the-top players and/or cable companies, Brussels telecom lawyer David Cantor said. Doing so could put Europe out of touch with the rest of the world, said Bird & Bird (London) information technology and business attorney Roger Bickerstaff.

The DSM strategy will rest on three pillars, the EC document said: (1) better access for consumers and businesses to online goods and services across Europe; (2) creating the right conditions for digital networks and service to flourish through rules that spur investment, fair competition and a level playing field; (3) maximizing the growth potential of Europe's digital economy by investment in cloud computing, big data and other infrastructure, making industries more competitive and boosting public services and job skills. The EC is expected to release its DSM strategy May 6.

Before year's end, the EC will launch a "comprehensive assessment of the role of platforms that will cover issues such as transparency in search results (involving paid-for links and/or advertisement); how platforms use the data they acquire; how to clarify the conditions for use of copyright-protected content by intermediaries; constraints on the ability of people and businesses to move from one platform to another; and how best to tackle illegal Internet content. While their impact differs depending on the type of platform and market power, "some online platforms can control access to the benefits of the Internet and can exercise significant influence over how the various players in the market are remunerated," the draft said. Some platforms "have evolved to become players competing in many sectors of the economy and the way they use their market power raises a number of issues that warrant further analysis," it said.

"Unfair regulation might create unfair disadvantages for traditional players or unclear rules for consumers," but that doesn't mean "we need to raise the regulation bar," said a spokesman for the European Telecommunications Network Operators' Association. "We need to update rules to today's competitive landscape by removing them where they have become unnecessary or by levelling the playing field where they cannot be lifted."

Cantor's "contrarian" view is that the EU "should, as a matter of priority," repeal the established telecom regime "in due course." Europe has reached the point "where incessant debate around highly detailed, multilayered regulatory policies and practices undermines real progress," he wrote in a summer 2014 International Institute of Communications article. "The new priority should be elimination of all but the most clearly indispensable regulatory interventions," he wrote. "Can you imagine 28 separate telecom [national regulatory authorities] getting their divergent hooks into global Internet platform services" such as Google and Facebook? he said. "The whole notion is absurd," he emailed.

Reports that Europe intends to regulate platforms are worrying, because there appears to be very little consideration of the wider international context, Bickerstaff said in an interview. Measures that encourage better digital cross-border trade in Europe are positive, but not if they create "Fortress Europe," he said. Imposing rules on platforms, for example, governing removal of illegal content or transparency of search results could throw the EU out of alignment with U.S. and other approaches, leaving it behind, he said.

The EC's approach should be a "zero tolerance policy" for monopolies, duopolies or closed oligopolies, new or old, said European Competitive Telecommunications Association Director Erzsébet Fitori. While there's emerging concern for monopolies at the over-the-top services (OTTs) layer, "old monopolies at the infrastructure layer are currently on the rise," she said. In this context, where the boundaries between physical and digital goods are blurring, it's incorrect to say that competition now takes place only at the service level between telcos and OTTs, she said. It "would be very tempting to adopt one policy objective for every issue and to call for a regulation of all the stakeholders, or a deregulation of others," but discussion of competition wouldn't mix the services and infrastructure layers, she said.

The "best way to explore our digital future" is through ensuring competition, Fitori told us. Lack of infrastructure competition "will endanger the development of the whole value chain and could jeopardize the creation of tomorrow's European Google," she said.