Europe’s challenge in finding the right balance in digital regulations

It has long been the vision of European policymakers to make the continent a centre of digital innovation to rival the US west coast and China. With almost half a billion people across some of the world’s most advanced economies, there is no inherent reason why Europe should lag behind.

The EU is about to produce a raft of new draft regulations, including a Digital Services Act covering everything from misinformation to app stores. Europe has long been a pioneer in internet regulation – as the General Data Protection Regulation (GDPR) has demonstrated – and much of what it does will be followed elsewhere. So getting this right matters not only to the EU but to the future of the wider internet, especially as US-China rivalry intensifies.

The future of the global internet as we know it in our opinion is far from assured. The rise of the Chinese model – segregated from the rest of the web and subject to extensive surveillance – presents a real risk to the open internet enjoyed by billions of users around the world. Other countries, including Russia and Turkey, have made similar moves to build digital walls and exert “data sovereignty”.

Much of what the EU aims to do is admirably rooted in values such as free expression, privacy, transparency and the rights of individuals. As the new rules and regulations are written, these values must be actively protected. But as the web fragments, Europe faces a in our opinion fundamental choice: does it design rules to keep the internet open and global; or does it build barriers for the bloc alone?

The temptation to do the latter is understandable, especially as other nations flex their digital muscles. But Europe’s competitiveness remains dependent on open global markets and more important unhindered trade within the single market.

It is to us worrying that some regulators and governments are increasingly acting unilaterally within the EU. Last month regulators have a ‘hit list’ of measures targeted largely at US tech companies. The free flow of data between the EU and third countries has recently been thrown into question, potentially hindering Europeans’ access to everyday services such as online shopping, video conferencing and social media.

A shift in our opinion towards digital protectionism would be self-defeating. Far from putting Europe at the cutting edge, it could accelerate the splintering of the internet, leaving Europe a bystander as US and Chinese companies dominate.

In our opinion European policymakers need to maximize the bloc’s advantages-top-quality talent, a large consumer market, first-class universities – and address its deficiencies – the lack of deep and liquid capital markets, and a patchy commitment to entrepreneurialism and innovation.

Above all, EU decision makers need to create a genuinely borderless Europe-wide market. If the numerous political declarations in favor of a digital single market were accompanied by action, that in our opinion would already have become a reality. But it isn’t. To sell across the EU a start-up in Lisbon, for example, still has to navigate different intellectual property laws, licensing rules and obstacles to the delivery of goods.

This in our opinion is even more urgent in the wake of the coronavirus, as companies use data and digital tools to rebuild. Reaching customers online is now central to how Europeans do business.

Sovereignty versus competitiveness is a false choice. The EU can have both, and remove internal barriers without creating new ones for businesses seeking to reach the vast majority of the world’s online population beyond EU borders. After all, its mission is to tear down walls, not to build new ones.