Ecommerce and the Single Digital Market: What Now?

Europe is busy putting its ‘Single Digital Market’ programme together, and it is set to change how customers and businesses in Europe use the internet to sell online, segment markets by nationality, use the cloud, deliver goods and use the ‘big data’ that’s been promised on the horizon for some time.

According to the EU, the Single Digital Market is “one in which the free movement of persons, services and capital is ensured and where the individuals and businesses can seamlessly access and exercise online activities under conditions of fair competition, and a high level of consumer and personal data protection, irrespective of their nationality or place of residence.”

At present, barriers online mean citizens miss out on goods and services: only 15 per cent shop online from another EU country; Internet companies and start-ups cannot take full advantage of growth opportunities online: only 7 per cent of SMEs sell cross-border). Finally, businesses and governments are not fully benefitting from digital tools. The aim of the Digital Single Market is to tear down regulatory walls and finally move from 28 national markets to a single one. A fully functional Digital Single Market could contribute €415 billion per year to the EU economy and create hundreds of thousands of new jobs.

There are 16 different initiatives that are being developed, ostensibly to foster growth in cross-border sales of goods and services. These are based on three key pillars of access (better access for consumers and businesses to digital goods and services across Europe); environment (creating the right conditions and a level playing field for digital networks and innovative services to flourish); and economy and society (maximising the growth potential of the digital economy).

The first of these are proposals to simplify the rules around online cross-border purchases. Full legal harmonization is seen by many as the best regulatory tool to address both B2C contract law and customers right. The challenge here is diversity in privacy and data protection legislation. There are a number of initiatives associated with this, from increased enforcement of consumer rules, unjustified geo-blocking, a modernization of copyright law, a review of the Satellite and Cable Directive and to streamline the burden of managing different VAT regimes. Another key area is parcel delivery – currently 62 per cent of companies trying to sell online say that too-high parcel delivery costs are a barrier. And obviously potential competition concerns must be addressed, and the Commission has launched an antitrust competition enquiry.

In order to create a level playing field, the Commission is intended to overhaul EU telecoms rules, review its antiquated audiovisual media framework, complete an analysis of the role of online platforms in the market (such as search engines, social media, app stores etc) and explore new ways of tackling illegal content. One concern is to reinforce trust and security in digital, with new data protection rules due to be adopted by the end of 2015, as well as a review of the e-Privacy Directive. The Commission is also planning a cybersecurity partnership with the industry.

In terms of maximising growth potential, the Commission is proposing a ‘European free flow of data initiative’ in order to encourage innovation. The Commission will also launch a European Cloud initiative covering certification of cloud services, the switching of cloud service providers and a “research cloud”. Priorities for standards and interoperability are to be defined, especially for such areas as e-health, transport planning and energy (smart metering). In a more nebulous move, the Commission wishes to ‘support’ an inclusive digital society. Part of this will include a new e-government action plan to connect different national systems. This “only once” initiative will cut red tape and potentially save around €5 billion per year by 2017. The roll-out of e-procurement and interoperable e-signatures will be accelerated.

These goals are intended to be achieved by the end of 2016. While this appears to be an exceptionally ambitious timetable, there is little doubt that the EU is making great strides to encouraging the development of a cross-border ecommerce world.