By Tom Fairless And Sam Schechner
BRUSSELS--Why doesn't Europe have its own Google or
Facebook?
Many European policy makers say the region's homegrown Internet
companies haven't made the big leagues at least in part because of
a patchwork of tax, copyright and e-commerce rules that have
stunted their growth. They also point to allegedly unfair business
practices by U.S.-based competitors.
On Wednesday, the European Union tackled both issues, unveiling
a plan to unify Europe's fragmented digital market and crack down
on potential abuses of market power by U.S. Web giants.
The plan calls for an overhaul of EU telecommunications rules,
reconciling tax and copyright rules within the 28-nation bloc, and
simplifying regulations for companies that sell goods or send data
across European borders.
One key goal, the EU said, is to help European consumers shop
online in other EU countries as easily as in their home countries,
and to get the best products at the best prices.
Jean-Claude Juncker, president of the European Commission, the
EU's executive arm, said the plan would "lay the groundwork for
Europe's digital future." "I want to see pan-continental telecoms
networks, digital services that cross borders and a wave of
innovative European startups," he said.
At the heart of the project is Europe's battle against the
dominance of U.S.-based Web companies. The plan calls for several
major inquiries into possible abuses by U.S. companies, including a
"comprehensive analysis" of the role of online platforms such as
search engines and price-comparison websites, and a previously
signaled investigation by antitrust regulators into whether
e-commerce companies such as Amazon.com Inc. are restricting
cross-border trade.
U.S. tech companies are gearing up to fight the initiative.
"Imposing regulatory 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-based trade group that includes
Google Inc., Facebook Inc. and Microsoft Corp.
Amazon said Wednesday that it has long supported cross-border
trade, and that its European-based sellers on its marketplace
enjoyed more than EUR2.8 billion ($3.12 billion) in cross-border
sales within Europe last year.
Companies on both sides of the Atlantic generally support the
move toward a single online market. Antony Walker, deputy chief
executive of TechUK, a lobbying group for British tech companies,
said his group supported proposals to eliminate barriers to
cross-border trade, but he warned against "new barriers being
erected."
A single digital market "is a big deal" that "will add
tremendously to [Europe's] competitiveness in the long term,"
General Electric Co. Chief Executive Jeffrey Immelt said in a
speech Tuesday in Brussels. "No serious investor believes Europe
really cares about jobs if the rules are inconsistent," he
said.
But a single digital market is a long way from becoming reality.
The commission must turn them into concrete legislative proposals
that will be debated and modified by national governments and the
European Parliament, a process that usually takes years.
It has taken Europe several decades to build a unified market
for goods and services, and it has done so in a piecemeal way, with
some plans falling by the wayside.
The proposed antitrust probes, by contrast, don't depend on new
legislation.
The legal landscape is already shifting in response to European
fears that big U.S. tech firms have become too dominant. National
regulators in the Netherlands, Spain and other countries are
investigating Facebook's privacy practices. The EU's antitrust
regulator, meanwhile, has filed formal charges against Google
alleging it has abused its dominance as a search engine to promote
its own businesses.
Google denies the allegations, and says it faces fierce
competition in a fast-changing marketplace. Facebook says that it
follows European data-protection rules and has been repeatedly
audited by the data protection authority in Ireland, home of its
European headquarters.
Among the most controversial of Wednesday's proposals is one to
better fight "illegal content on the Internet."
Under the EU's current rules, tech companies must comply with
valid requests from governments and copyright holders to take down
copyrighted material, but the companies generally aren't liable for
content to which they haven't been alerted.
In the changes being considered as part of the new plan, 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.
While the plans stop short of new regulations for Internet
companies, Günther Oettinger, the EU's digital commissioner,
stressed that the option was still on the table, including those on
the way companies handle illicit content.
Technology firms cautioned against heavy-handed new rules, which
they said could constrain Europe's ability to attract technology
companies and to develop its own.
"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
Computer & Communications Industry Association, a U.S.-based
trade group, adding that regulation of big internet platforms is
"ill conceived."
Europe's telecom operators welcomed the plan. "We commend the
[EU] for its commitment to ensure fair competition and a level
playing field," said Britain's Vodafone Group PLC said. But it
called for "a more ambitious timetable," and urged regulators to
allow more mergers between telecom operators.
Write to Tom Fairless at tom.fairless@wsj.com
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