Last week, the European Commission (EC) issued its much anticipated Digital Single Market (DSM) strategy. The paper, leaked before its publication, provides an overview of the EC work program in the digital space for the next two years. The EC sets a number of ambitious legislative targets to tackle regulatory barriers and restrictions that hinder online businesses’ ability to innovate and grow in the EU. An indicative list of the EC’s initiatives and proposals, as well as their expected timeline, is available here. At the same time, the EC launched an antitrust sector enquiry into e-commerce to examine whether businesses are intentionally limiting cross-border online trade (see our alert here).
The DSM strategy is built around three themes:
- Improving online access – by confronting various cross-border barriers holding back e-commerce, from copyright to VAT compliance.
- Creating the right conditions for digital networks and innovative services – including returning to unresolved issues around radio spectrum and infrastructure investment, revising the rules on audiovisual media, and closely examining the role of online platforms and digital intermediaries.
- Encouraging digitalization – including improving data flows, standard-setting and e-government initiatives.
Certain barriers to digital trade appear to fall outside the scope of the DSM strategy. Negotiations on proposals affecting protection of personal data, network and information security, and payment services are already progressing separately. In addition, the DSM strategy does not address national and regional questions arising because of inadequate implementation and application of EU legislation.
Impact on Audiovisual Media Service Providers
The DSM strategy is likely to affect the ways that providers of audiovisual media services distribute content, e.g.:
- The EC will be looking at whether the Audiovisual Media Services Directive (AVMSD) needs to be revised.
- Currently traditional broadcasters have more obligations than on-demand services. This is because users of on-demand services have more control over the content and time of viewing. Taking into account new technology and new business models,the EC is considering whether to put traditional broadcasting and on-demand services on a more equal footing. The promotion of European works is expected to be particularly contentious. Given how important the European cultural space is to a number of Member States, it is possible that proposals are put forward for on-demand service providers to face more stringent obligations to promote European works.
- In so far as over-the-top (OTT) audiovisual media service providers are concerned, the EC will also be looking closely at geo-blocking and geo-localization practices, i.e. practices used to deny consumers from other Member States access to a specific website, or to re-route consumers from other Member States to a local website with different content offerings and prices.
- In this regard, the DSM strategy only refers to the prevention of “unjustified” geo-blocking and geo-localization. The language indicates that the EC recognizes that such practices may be justified in certain circumstances – but it remains unclear what these are. Any initiatives by the EC on this front are expected to be closely linked to the ongoing copyright reform, as well as the recently launched e-commerce antitrust sector inquiry.
- The EC will launch a comprehensive assessment of online platforms and intermediaries (i.e. gateways for publishing and/or accessing content) including audiovisual online platforms. This initiative builds upon the widely publicized antitrust investigations into Google’s web-search services and Apple’s music-streaming services. The assessment will likely review transparency, use of the information collected and relationships with content creators. While France and Germany have called for the outright regulation of online platforms, the EC will investigate and consult on the role of online platforms in the EU, and then decide whether legislative measures need to be introduced.
While the DSM strategy is aimed at fostering innovation and growth by breaking national barriers and harmonizing regulatory regimes, there is an inherent risk that the EC ends up over-regulating the online space. Companies and associations in the audiovisual media sector should develop early on advocacy plans to address those parts of the DSM strategy that are likely to affect their businesses, in order to avoid unsound regulatory requirements in the future.