EU regulators consider tighter rules for e-commerce and tech companies

May 4, 2015 05:31 PM

(Bloomberg)—The European Union is considering proposals to rein in the world’s biggest Internet companies in a regulatory clampdown just weeks after the EU accused Google Inc. of abusing its market power.

On Wednesday, the European Commission will propose rules for the technology industry with implications for everyone from room-sharing website Airbnb Inc. to e-commerce and companies like Google and Inc., No. 1 in the Internet Retailer 2015 Top 500 Guide and the 2014 Europe 500 Guide.

In particular, the EU’s executive arm will examine whether extra regulation is needed to curb web companies’ market power, according to a draft of the proposal obtained by Bloomberg. The language echoes a separate four-year-old EU probe into Google’s power over the web, which is looking at allegations that the company favors its own services and paid ads over rivals.

“Some platforms can control access to online markets and can exercise significant influence over how various players in the market are remunerated,” according to the document. “This has led to a number of concerns over the growing market power of some platforms.”

While the rise of the “sharing economy,” which includes companies like Uber Inc. and Airbnb, could promote growth and jobs in some industries, it may also raise “new regulatory questions,” the EU watchdog said.

The commission intends to start an assessment of these companies’ practices by the end of the year, looking into how transparent companies are about how they store and use data and display search results, according to the document. The investigation will also look at how easy it is for customers to move between services.

‘Right conditions’

“One of the aims is to create the right conditions and a level playing field for digital networks and innovative services to flourish,” Mina Andreeva, a spokeswoman for the commission, said by email. She declined to comment on details of the proposals, saying discussions are continuing.

Amazon said in an emailed statement it agrees with “the vision of Europe as a single market” and looks forward to working with the commission.

Spokesmen for Google, and Airbnb didn’t immediately return calls and emails seeking comment. Uber declined to comment.

Google has come under increasing pressure in Europe. The EU’s patience with the world’s biggest search engine finally ran out last month when the EU accused the company of abusing its dominant position in the Internet shopping market. Officials also started a new investigation into its Androidmobile-phone software.

Antitrust woes

Aside from its antitrust woes, Google is haggling with EU regulators over the scope of an EU court ruling that said citizens have a “right to be forgotten” and can seek deletion of links to outdated online information.

Other U.S. technology companies, such as social-network giant Facebook Inc. would also be targeted by a separate overhaul of Europe’s data protection rules under discussion by lawmakers. The measures could allow regulators to levy fines of as much as 100 million euros ($111 million) for privacy violations.

The EU’s clamor for regulation has not gone unnoticed in the U.S. While technology companies have increased their lobbying in the bloc, President Barack Obama criticized the European approach, according to in an interview with Re/Code in February.

Free flow

An industry group that speaks for technology companies including Google, EBay, Netflix Inc. and Amazon, said the idea of regulating platforms “is ill-conceived given that businesses from newspapers to e-commerce sites to cars are increasingly becoming digital platforms.”

“Platform regulation would hit European platform companies hardest given they grow here,” James Waterworth, Europe vice president of the Computer & Communications Industry Association, said in an emailed statement.

Still, the CCIA said other measures in the draft, such as the free flow of data across the EU, are “excellent.”

Wednesday’s EU proposals are part of the so-called digital single market package, intended to harmonize rules governing the web and the infrastructure it relies on, and help the 28 countries that make up the EU work more like a single unit.

If they’re successful, the commission estimates that they could create 3.8 million jobs and generate an additional 415 billion euros to European gross domestic product, according to the report.

Copyright rules

The Brussels-based commission will also look at rules that reduce the differences between national copyright laws, making it easier for e-books, movies and TV shows to travel across countries. Less than 4% of video-on-demand is available across borders, according to the document.

By the end of the year, the commission said it will propose legislation to make digital content portable across Europe and give customers access outside of their countries. That would make it easier for a user to download a movie in the U.K. and watch it in Spain, for example.

The EU will also change the way it pursues copyright infringement, “focusing on commercial-scale infringements” and the application of copyright laws across borders, the commission said.

Crossing borders

The proposals will tackle obstacles to cross-border sales. Tariffs on packages that traverse country lines can be two to five times higher than domestic deliveries, which is hurting companies that want to sell their products online. The commission plans to take steps to bring down high prices of small shipments and increase regulatory powers over deliveries.

It’s meant to encourage Europe’s online shoppers, who are sometimes hit with surprise delivery fees when they buy from a shop in a neighboring country, and businesses that want to sell online, but have been held back by the costs.

In 2016, the commission will also propose rules to end the practice of “geo-blocking,” in which companies make some products unavailable to other European countries or change prices based on the customers’ location.

The proposal matches similar efforts elsewhere in the EU as regulators look for ways to encourage growth by making businesses work across national boundaries.

In March, EU Competition Commissioner Margrethe Vestager signaled a similar investigation, using her powers to get information from broadcasters, manufacturers and online retailers to stop legal and technical barriers to EU trade.


Film licenses

U.S. studios like Time Warner Inc.’s Warner Brothers and 21st Century Fox Inc. are being examined by the EU over TV licensing deals that limit who can access content. Online services such as Netflix must usually get separate licenses for music and films for every country in which they operate.

The pan-European Internet doesn’t work without the network. The EU will also suggest ways that make it easier for carriers such as Vodafone Group Plc and Orange SA to provide Internet access to more of the population. The plans will focus on making rules around spectrum, the airwave licenses that carriers bid on to carry signals, more uniform, according to the draft document.

The telecommunications rules will also look at creating a “level playing field” between traditional phone companies and over-the-top services, such as Microsoft Corp.’s Skype and Facebook, which offer similar services like messaging and calls, and aren’t subject to the same regulations.




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