EU sets out plan to shake up Europe's digital market

The US tech industry has reacted with deep wariness to Europe's plans to expand its digital economy, even as the formal announcement of the sweeping initiative in Brussels drew public support from the across the Atlantic.

Under long-awaited proposals for a so-called "digital single market", the European Commission plans reforms of everything from parcel delivery to telecoms and online retailing.

It also includes an extensive investigation into the role played by big online companies such as Facebook and Google in the European internet marketplace.

"The internal market is not functioning as it should," said Andrus Ansip, the former prime minister of Estonia and vice-president for the digital single market, at the launch of the proposals.

Officially, the promise from European officials to open up the region's digital markets drew statements of support from leading US tech companies, many of which have faced a backlash in Europe recently over their power and worries about issues ranging from privacy to digital surveillance.

Privately, however, some internet executives warned that the initiative could turn into an excuse to hamper US companies that dominate many parts of the web.

A senior executive at a US tech company said there appeared to be a tension within the commission between officials who want to adopt a "progressive" model of regulation aimed at benefiting all digital companies or those that are "using regulation to raise barriers" against US tech giants.

"There are risks to the digital economy if the regulation goes in the wrong direction," the person added.

US technology trade associations also warned that European regulators had shown little appetite for the light touch that had allowed internet companies to thrive in the US.

"It feels like they're trying to protect an old way of doings things," with companies like Uber and Airbnb going up against entrenched interests, said Ed Black, chairman of the Computer and Communications Industry Association. Brussels was also making a mistake by trying to make internet companies police online piracy, he added.

The investigation into the market dominance of US technology groups comes just weeks after the commission launched an antitrust investigation into search specialist Google.

The push for tougher regulation of US groups has been spearheaded by France and Germany, with ministers from both countries calling for scrutiny of "essential digital platforms".

Brussels has repeatedly dismissed allegations that it is anti-American in its approach to technology regulation. But the relative lack of big European internet companies - and the dominance of Silicon Valley groups - means that any investigation into dominant web platforms will focus on US companies.

Jean-Claude Juncker, president of the European Commission, said: "I want to see pan-continental telecoms networks, digital services that cross borders and a wave of innovative European start-ups."

The EU's executive body hopes to contribute €415bn a year to its economy with the measures and "create hundreds of thousands of new jobs" in Europe's sluggish economy.

The American Chamber of Commerce said the measures were "one of the best opportunities to date for Europe to reinvigorate its economy and remain competitive in an increasingly competitive global landscape".

As part of the proposals, the commission is also set to launch a competition inquiry into the ecommerce sector, examining the tactics used by online retailers and their suppliers.

"A strong focus has emerged on what brands are doing to segment markets," said Chris Sherwood, head of public policy at Allegro, an eastern European ecommerce group.

The commission also said it would do away with "unjustified geoblocking", which can stop consumers buying goods or watching films from a website in another country.

Groups most likely to lose out from looser rules on geoblocking include big-budget English language films and top-flight sports, according to Julia Reda, a German MEP, who is following the reforms.

Film groups argue that their smaller peers will be hit hardest. "Nothing the commission does will make Time Warner go out of business," said one industry lobbyist. Smaller companies will bear most of the burden from any rule changes, they argue.

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Commissioners are hopeful that greater involvement from member states will lead to a faster - and successful outcome. Mr Ansip said: "If it is their document, then I can hope that we can move on much faster than with those two previous projects."

Any draft EU legislation stemming from Wednesday's action plan would need approval from governments and legislators in the European Parliament before it would take effect.

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