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European Union Digital Single Market
October 6, 2017
The European Commission, the European Union's (EU's)
executive body, announced the Digital Single Market
(DSM) strategy on May 6, 2015, to modernize and
harmonize legislation governing the digital economy across
the EU's 28 member states. The strategy consists of 35
draft legislative proposals and initiatives concerning the
DSM. Congress has an interest in understanding the DSM
as it has generated debate among EU and U.S.
policymakers, industry groups, and other stakeholders about
its potential benefits and drawbacks. The DSM is expected
to impact U.S. firms who operate in or trade with the EU. It
also may influence the EU's position in any trade
negotiations with the United States or third parties, given
the significant role of the digital economy in the U.S.-EU
trade and investment relationship.
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The DSM could contribute £415 billion per year ($488
billion) to [the EU] economy and create hundreds of
thousands of new jobs, according to the Commission.
Today, of the online services consumed by EU citizens,
54% are provided by U.S.-based companies, 42% by
companies in their own country, and 4% by companies
based elsewhere in the EU.
The DSM has three pillars, each with multiple initiatives:
Pillar 1 aims to improve consumer and business access to
digital goods and services by updating rules for digital
contracts, cross-border content portability within the EU,
and copyrights; facilitating e-commerce by eliminating geo-
blocking (discrimination against online consumers based on
nationality or location), enabling cross-border parcel
delivery, and revising consumer protection regulation; and
updating the value added tax system.
Pillar 2 focuses on creating a level playing field for digital
networks and services by updating rules for
telecommunications, mobile Internet services, audiovisual
media services, online platforms, data privacy, and
establishing a cybersecurity public-private partnership.
Pillar 3 seeks to maximize the growth potential of the
digital economy by defining information communication
technology and interoperability standards; providing digital
public services; and supporting EU and country-specific
data and digital innovation efforts, the free flow of data
within the EU, and a European Cloud Initiative.
In its May 2017 mid-term review, the Commission calls on
the European Parliament and member states (acting in the
Council of the European Union) to adopt the existing
legislative proposals, but this is a slow process in the EU
system and further changes are still possible. Observers
note that some proposals are controversial for the
Parliament and the member states for a variety of political
and economic reasons. The report also notes three areas
where more Commission action is needed: the data
economy, cybersecurity, and online platforms. The
Commission has since released proposals to increase EU-
wide integration on cybersecurity and to address barriers to
internal EU cross-border flows of non-personal data, raising
new controversies. Debate continues on defining online
platforms and potential scope of any regulation.
The mid-term report also estimates a funding shortfall for
infrastructure investment and identifies programs to
stimulate investment. While all member states now have
broadband plans, the report highlights disparities among
digital strategies and the levels of private sector digitization
and citizen digital literacy, calling for greater convergence.
The DSM raises several potential trade barriers for U.S.
firms, as highlighted by the U.S. Trade Representative's
2017 report on foreign trade barriers. Issues include:
The DSM proposes changes to EU copyright rules to fit the
digital era. The reforms aim to strike a balance between the
rights of those in the copyright industries and the rights of
users. However, technology industry groups criticize the
proposal for limiting copyright protections, and civil society
groups favoring greater access view them as inadequate.
One flashpoint is the proposed new right for publishers to
protect digital use of their press publications for 20 years.
This would enable them to conclude license agreements
with news aggregators. Member states also would have the
option to allow publishers to claim compensation for using
the work even if the use falls under a copyright exception
(the so-called link/snippet tax). Another contested area is
proposed new copyright exceptions. For instance, EU
member states would have to introduce in their national law
mandatory exceptions to allow text and data-mining of
copyrighted content for scientific research, use of
copyrighted content for teaching, and copying copyrighted
work for collections by cultural heritage organizations.
The reforms also appear to impose a new obligation on
Internet service providers (ISPs) that store and provide
access to large amounts of user-uploaded content. Such
ISPs would have to take certain measures to protect this
material. Some argue that the requirement to actively
monitor user-uploaded content differs from the U.S.
approach, which gives ISPs safe harbor from liability for
infringing works on their systems if they take certain
actions in response to requests from content owners.
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The DSM includes plans for working with European and
other standards development organizations to identify and
build standards in five ICT areas: 5G communications,
cloud computing, the Internet of things, (big) data
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