By Sam Schechner
U.S. tech firms are gearing up to fight a European Union plan to
level the playing field for companies competing against Internet
giants, arguing that the plan could push the bloc toward
protectionism and censorship.
The EU's executive arm announced a swath of proposals on
Wednesday aimed at boosting investment in European startups, as
well as at harmonizing copyright rules and simplifying regulation
for companies that sell goods or send data across European
borders.
But the plan for a new European digital strategy also strikes at
a pressure point for U.S. technology firms in Europe by proposing
the EU study a new regulatory framework for big Internet companies
such as Google Inc. and Facebook Inc. Under the blueprint, the EU
is also opening an investigation into whether Internet commerce
companies like Amazon.com Inc. are restricting cross-border
trade.
While far from becoming law, the new proposals show how the
legal landscape is already shifting in response to European fears
that big U.S. tech firms have become too dominant. That's leading
the firms to push back publicly and privately in an effort to
defend one of their biggest markets.
"Imposing regulator barriers would be a grave mistake for
Europe, and would have harmful effects on trans-Atlantic trade and
investment," said Dean Garfield, head of the Information Technology
Industry Council, a Washington, D.C.-based trade group that
includes Google, Facebook and Microsoft Corp.
One U.S. technology executive added: "This is a regulatory
agenda in search of a rationale."
The set of proposals is the latest salvo in Europe's push to
rein in the power of a cadre of U.S.-based Internet superpowers.
National regulators in the Netherlands, Spain and other countries
are investigating Facebook's privacy practices. At the EU level,
the antitrust regulator has filed formal charges against Google
alleging that it has abused its dominance as a search engine to
promote its own businesses.
France and Germany have been at the forefront in the push for
regulation of so-called Internet platforms for the better part of
two years. In France, government advisory bodies have sketched out
new principles they describe as "platform neutrality" aimed at
creating new obligations for big tech companies. Senior officials
from both countries addressed a letter last week to Brussels
officials to urge action.
In an internal position paper in February, the office of EU
Digital Commissioner Günther Oettinger said that the bloc should as
part of its deliberation consider creating an EU-wide regulator.
But the proposal on Wednesday is only to launch a public
consultation.
"Exploring these issues could be a good exercise," said Mario
Mariniello, a research fellow who studies regulation and
competition policy at Bruegel, a Brussels-based think tank. "But
the danger is that it will descend into protectionism."
To be sure, technology companies say that they support many
elements of the digital-single-market plan, such as harmonizing
copyright rules, which would simplify their businesses. But they
say that other elements of the plan, beyond platform regulation,
could create new regulatory headaches, such as audiovisual rules to
cover online-video services, they say.
"Some of these proposals take on real problems, but others also
take on perceived problems where there is very little evidence
base," said James Waterworth, head of the European office for the
Computer & Communications Industry Association, a U.S.-based
trade group.
In response, executives at the companies say that they plan a
flurry of lobbying to explain their businesses to European
officials, and to remind the general public how they contribute to
the European economy. "This will kick off an intensive period of
everybody lobbying the Commission madly," a U.S. tech executive
said.
Amazon, for instance, says its European-based sellers earned
more than EUR2.8 billion ($3.12 billion) in cross-border sales
within Europe last year. Apple has highlighted its hiring and
spending in Europe. In France, Google recently launched an
advertising campaign dubbed "Engine of French Success" to highlight
how the search engine helps French businesses.
"We have to make a better case," another U.S. tech executive
said.
The proposal to better fight "illegal content on the Internet"
is one of the most controversial. Under the EU's current rules,
tech companies comply with valid take-down requests from
governments and copyright holders, but they generally aren't liable
for content to which they have not been alerted.
But in changes being considered as part of Wednesday's
proposals, the EU could require "Internet intermediary services" to
monitor their systems for illicit content--something tech
executives say could have a chilling effect on free speech.
"You could just end up censoring everything because that's the
easier thing to do," said Chris Sherwood, the head of public policy
for Allegro Group, an online marketplace based in Europe.
Officials in France, the U.K. and Germany have in recent months
repeatedly demanded faster and more effective removal of terrorist
propaganda from online platforms. But while the companies say they
are willing to cooperate, they have resisted calls for automated or
pre-emptive filtering.
Instead they have sought ways to speed up the existing system,
striking a deal last month with French officials.
Write to Sam Schechner at sam.schechner@wsj.com
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