Role for the EU single market in the digital economy

Speech about the importance of digital in the EU single market, that also sets out the UK's digital priorities.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Role for the EU single market in the digital economy

I would like to begin by thanking the presidency for the opportunity to share some thoughts on the digital single market, one of the major issues facing the EU today. We have been impressed with the prominence given to the DSM by the Commission and the Presidency, particularly through the engagement of stakeholders and the development of the evidence base on the digital economy.

We’ve heard today why the digital single market is so important. We were asked about our priorities, and I can be clear about this: consumers want to do more and more online, as easily as possible. Firms want to establish themselves, grow, and sell across the whole market place. Our priority is to enable consumers and businesses to take advantage of these opportunities.

The digital revolution has challenged established business models and well-worn regulatory frameworks. Not only are purely digital businesses becoming more and more important to the economy, but digital tools and processes are radically transforming traditional manufacturing and services. Online and offline industries are converging.

We see this in the ‘internet of things’, one of the most exciting developments on our horizon, which the UK is stimulating through new investment in demonstrator programmes, business incubator space and a research hub. And we see this here in Latvia, where advanced technology is powering the use of traditional materials in new ways. Amber, used in jewellery for thousands of years, is now being employed in the textile industry to make fashion garments, and is even being used in the manufacture of medical equipment.

Digital has disrupted our ways of doing things, and it will continue to disrupt them. But we have a choice to make in our response to this disruption – we can respond in fear or in hope.

A response of fear would see us seek to regulate aggressively, to penalise innovation, to protect incumbents from new challengers. It would see us ignore opportunities to harness the digital single market to create consumer choice, jobs, and growth.

We see this on platforms, where fear of market dominance could lead us to regulate impulsively – without clarity on what we want to achieve, or the evidence on how we could achieve it.

Yes, there are genuine concerns about market abuse which must be addressed. We would like to see changes to speed up the Commission’s application of the current competition rules, and would welcome a review of whether the existing framework is fit for the digital age.

But knee-jerk, quick-fix regulations could harm the very European start ups that we’re hoping will challenge the status quo.

Before we rush to regulate, we need to think carefully about what the issues are, and what the best way to address them is. The UK’s Competition and Markets Authority is undertaking interesting work in this area, examining online reviews and endorsements, and the commercial use of consumer data. It is important that we consider all the evidence available, and think through different options including alternatives to regulation. I believe traditional, inflexible, top-down regulation will not allow us to keep pace with the digital revolution.

Instead of introducing one-size-fits-all rules which could stifle innovation out of fear, we must respond with hope, to allow creative and digital industries to flourish. In the UK, digital growth is driven by tens of thousands of exciting tech businesses – the vast majority of them small businesses – situated in digital clusters across the country which specialise in particular sectors, technological capabilities and talent. And these clusters exist right across Europe – I know Riga is home to a thriving IT sector.

Some of the actions needed to support these sectors – such as developing digital skills – work best when they are tailored to local circumstances, and therefore should be left to member states. But where the EU can have the most impact is through making it easier for digital businesses to scale up, expand and add value to the whole economy. For example, we should ensure that there is a single digital process for every step required to set up a company and operate online. And once a company has gone through that process in one member state, it should be valid across the EU.

Hope is also about empowering our consumers and giving them greater choice and confidence. We must bring our consumer rights framework up to date and ensure we can handle questions over digital content quickly and fairly. We must also benefit consumers by championing data portability. This would help create more innovative and competitive markets, supporting challenger businesses and putting more power into the hands of consumers.

We see this choice between a response of fear and a response of hope also on copyright, where the fear of harming our creative industries could lead us to ignore new opportunities and consumer demands.

I am passionate about supporting and developing our creative sector. Europe’s creative output is one of its biggest assets. We must continue to ensure our creative industries go from strength to strength.

This is entirely consistent with embracing the need to update our copyright framework for a digital age. This doesn’t mean we should introduce a single copyright title, but we do need targeted reform. We want to see a digital single market where there is greater availability of legitimate content on fair and reasonable terms, where consumers can access their digital downloads and streaming services when visiting any member state. And this, in turn, will reduce incentives for copyright piracy and ensure that creators get the rewards they deserve.

My response to the digital single market is one of hope, of optimism. We can find a way of protecting consumers and ensuring a level playing field, without shutting the door to new approaches that give benefits to consumers and the wider economy alike. We need to think, ‘What do we want to achieve?’ rather than ‘What do we want to stop?’ Only in this way will we help businesses grow.

And this also gives consumers what they want – tailored services, innovative ideas, lower prices, and choice.

Let me suggest 3 concrete things that we can do:

First, make life easier for business

We need a regulatory framework that protects our citizens and enables our digital businesses to thrive. We must apply better regulation principles at national and European level to ensure that we remove existing barriers to a digital single market, and do not erect new ones. As suggested in the Presidency’s paper, all European legislation should be subject to a ‘digital test’ to check that it is suitable for today’s digital economy. We must provide clear, accessible information about how to set up and do business across Europe, and we should make our required procedures for businesses as simple as possible, and available to complete online.

Second, create the right incentives

As well as making new legislative proposals to bring the copyright framework up to date and encourage the growth of new services, we must ensure that investment in intellectual property is rewarded. This includes making sure that we take action to enforce copyright rules, so that creators are paid for their work. The only way we will ever agree a package on copyright is if we can demonstrate that it works for consumers and the creative industries alike.

Finally, engage

We need to be humble enough to recognise that we as policy makers do not fully understand this technological revolution, nor can we predict the directions that it will take. We need to continue to listen to the new entrepreneurs and to the mature businesses, to citizens and consumers – and together design the legislative and non-legislative framework that the digital single market needs to flourish.

Published 26 March 2015