LEAK: Digital services face EU competition crackdown

European Commissioner for Competition Margrethe Vestager gives a press conference on an antitrust decision against NBCUniversal in Brussels, Belgium, 30 January 2020. [EPA-EFE/STEPHANIE LECOCQ]

The European Commission is mulling over measures to bolster competition rules for digital services in order to rein in the dominance of global tech giants and foster “technologies that work for people”, a draft communication obtained by EURACTIV reveals.

The document states “existing laws that govern the behaviour of traditional industries need to be adapted to the specific circumstances under which new digital business models operate.”

“It is important that the competition rules are fit for a world that is changing fast and increasingly digital,” the communication, which outlines Europe’s vision for its future digital landscape, adds. The document is due to be presented on February 19.

The Commission finds that its plans for the future of the digital sector will be marked by how it is able to leverage regulation as a means to ensure a competitive landscape in the European Union, fostering a “vibrant, globally competitive, value-based and inclusive digital economy and society” through three columns of activity: ‘Technology that works for people’, a ‘fair and competitive digital economy’ and a ‘digital and sustainable society.’

Within this tribrid, the communication draws attention to some of the forthcoming actions that the Commission is due to take as a means to bolster its global digital profile.

Such include the presentation of its White paper on Artificial Intelligence later this month, the introduction of the Digital Services Act towards the end of the year, a legislative framework for data governance, a commitment to firming up the EU’s key digital technologies, and the EU’s Media Action Plan and Democracy Action Plan.

On competition, the Commission states that it is currently in the process of “evaluating and reviewing the competition rules to ensure that they remain fit for purpose,” and will also launch a sector inquiry in the field. A specific timeline of when such reforms could be put forward is still being considered.

The executive notes that the dominance of online services and alleged anti-competitive practices are not due to a lack of rules on the EU’s side. Rather, the document states that there has been a difficulty in enforcing these rules in the “opaque digital space.”

“This needs to change. We will rigorously enforce existing rules, and update them where this is necessary to make them fit for the digital age,” the document adds.

The EU’s Digital and Competition tsar, Margrethe Vestager has previously taken a hardline on the unfair practice of global tech firms. Last year, the Commission issued a €1.49 billion against Google for abusive practices – the third fine of its kind against the company since 2017.

Digital taxation initiative 

Moreover, the Commission also draws attention to the importance of establishing an appropriate framework for the taxation of digital giants, stating that some tech firms have a ‘winner-takes-it-all’ approach, where “a few companies with the largest market share receive the bulk of the revenues on the value that is created in a data economy.”

“Those revenues are often not taxed where they have been generated, thus distorting competition and undermining a societies’ tax base.”

“It is unacceptable that some companies pay their taxes and others do not,” the communication adds.

Talks are ongoing at the international level as to how taxation could be adapted to the digital age, following a failure for EU member states to adopt a common position last year with a contingency of member states standing against the plans, including Ireland, Finland, Sweden & Czech Republic.

One of the challenges noted by member states pushing for the reforms, including France and Spain, has been the fact that tax legislation requires unanimous approval in the Council.

Last year, the EU’s plans involved a 3% levy on companies earning €750 million in revenue, €50 million of which would need to be EU taxable revenue.

The Commission communication states that a Digital Taxation Initiative will be presented, but a specific timeline is not mentioned. Such a project will be contingent on the ongoing discussions on the matter at the OECD.

5G

On next-generation mobile technologies, the Commission states that “Europe must become the best-connected continent in the world, powered by secure fibre and 5G networks.”

The executive will also look to accelerate Europe’s Gigabit connectivity, “through a revision of the Broadband Cost Reduction Directive, an updated Action Plan on 5G and 6G and a new Spectrum Policy Programme (2021).”

The Commission had previously presented its ‘5G for Europe: an action plan’, which establishes a common EU calendar for a coordinated 5G commercial launch in 2020.

However, some initiatives in certain member states have been beset by delays, due to wider geopolitical concerns related to the reluctance of certain EU member states to work with Chinese telecommunications firm Huawei, following US lobbying against the company.

In terms of the application of next-generation mobile technologies in the transport sector, the executive notes the importance of the roll-out of 5G corridors for connected and automated mobility, and states that an act on self-driving and connected mobility will be presented to ensure “updated legal frameworks that will foster the safe deployment of autonomous vehicles in Europe.”

Subscribe to our newsletters

Subscribe

Want to know what's going on in the EU Capitals daily? Subscribe now to our new 9am newsletter.