EPC Webinar, Digital Clearinghouse, 29 October 2020
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Thank you very much for inviting me to be with you today. It’s a pity that we can’t be together in person. But it’s good that we still have this chance to meet, in spite of the physical distance that the coronavirus is forcing on us.
This virus has brought a lot of pain, dislocation and worry to millions of people in Europe, and around the world. But we have one thing that no one ever had before in a pandemic – we have digital ways to fill the gaps that physical distancing leaves. We’ve been able to go on studying and working, shopping and seeing friends – and of course, discussing policy. All because of technology that didn’t even exist, a couple of decades ago.
Twenty years ago, when the EU’s E-Commerce Directive set the basic rules for digital services in Europe, the Internet was a very different place. Its potential was clear – but in that year of the dotcom crash, companies were still struggling to find the business models that would allow them to get the most out of that potential.
And in the last two decades, they’ve succeeded – to an astonishing degree. Companies that didn’t even exist in 2000 have become giants, with billions of users across the world. Back in 2002, less than one in ten Europeans shopped online – now the figure is more than seven out of ten. Today, we can easily watch movies and share videos online, and chat with our colleagues and family all over the world. We can choose between millions of Internet sellers, between billions of sites full of news and information.
To navigate that enormous range of possibilities, we’ve come to rely on a few huge digital platforms to give us a sort of map, that helps us find what we’re looking for. But a map is not the world. Every map has to make choices, about which things to show us, and which ones to hide away. And those choices shape our understanding of the world, and our knowledge about the possibilities we have.
So these platforms have become gatekeepers, with enormous power over our lives. They can influence our safety – whether dangerous products and harmful content can spread widely, or whether they’re quickly removed. They can affect our opportunities – whether markets respond to our needs, or whether they just work in the interests of the platforms themselves. They even have the power to guide our political debates, and to protect – or undermine – our democracy.
And the more we come to understand how much we depend on these platforms – and how little we really understand or control the choices they make – the more people’s trust in digital technology begins to waver. And without that trust, we won’t be able to get the most out of the potential of digitisation.
That’s why our strategy, to make the 2020s Europe’s digital decade, is every bit as much about building trust as it is about investing in digital innovation. And in just a few weeks, we plan to publish two draft laws that will help to create a more trustworthy digital world.
One part of those rules will be the Digital Services Act, which will update the E-Commerce Directive, and require digital services to take more responsibility for dealing with illegal content and dangerous products.
Those services will have to put clear and simple procedures in place, to deal with notifications about illegal material on their platforms. They’ll have to make it harder for dodgy traders to use the platform, by checking sellers’ IDs before letting them on the platform. And they’ll also have to provide simple ways for users to complain, if they think their material should not have been removed – protecting the right of legitimate companies to do business, and the right of individuals to freedom of expression.
Those new responsibilities will help to keep Europeans just as safe online as they are in the physical world. They’ll protect legitimate businesses, which follow the rules, from being undercut by others who sell cheap, dangerous products. And by applying the same standards, all over Europe, they’ll make sure every European can rely on the same protection – and that digital businesses of all sizes can easily operate throughout Europe, without having to meet the costs of complying with different rules in different EU countries.
The new rules will also require digital services – especially the biggest platforms – to be open about the way they shape the digital world that we see. They’ll have to report on what they’ve done to take down illegal material. They’ll have to tell us how they decide what information and products to recommend to us, and which ones to hide – and give us the ability to influence those decisions, instead of simply having them made for us. And they’ll have to tell us who’s paying for the ads that we see, and why we’ve been targeted by a certain ad.
But to really give people trust in the digital world, having the right rules in place isn’t enough. People also need to know that those rules really work – that even the biggest companies will actually do what they’re supposed to. And to make sure that happens, there’s no substitute for effective enforcement.
So I’m really pleased that the EPC has decided to organise this webinar, focusing on this question of enforcing the rules. And effective enforcement is a vital part of the draft laws that we’ll propose in December. For instance, the Digital Services Act will improve the way national authorities cooperate, to make sure the rules are properly enforced, throughout the EU. Our proposal won’t change the fundamental principle, that digital services should be regulated by their home country. But it will set up a permanent system of cooperation that will help those regulators work more effectively, to protect consumers all across Europe. And it will give the EU power to step in, when we need to, to enforce the rules against some very large platforms.
But perhaps the biggest challenge we face with enforcement is making sure that we have the right legal framework and powers to keep digital markets competitive and fair.
Those markets ought to give companies of all sizes, from all over Europe and beyond, a fair chance to succeed. They should offer consumers a good deal – a broad choice of the best, most innovative products, at a price we can afford. But in this age of digital gatekeepers, it’s becoming more difficult to keep markets working well with the powers we have.
So to keep our markets fair and open to competition, it’s vital that we have the right toolkit in place. And that’s what the second set of rules we’re proposing – what we call the Digital Markets Act – is for.
That proposal will have two pillars. The first of those pillars will be a clear list of dos and don’ts for big digital gatekeepers, based on our experience with the sorts of behaviour that can stop markets working well.
For instance, the decisions that gatekeepers take, about how to rank different companies in search results, can make or break businesses in dozens of markets that depend on the platform. And if platforms also compete in those markets themselves, they can use their position as player and referee to help their own services succeed, at the expense of their rivals. For instance, gatekeepers might manipulate the way that they rank different businesses, to show their own services more visibly than their rivals’. So the proposal that we’ll put forward in a few weeks’ time will aim to ban this particular type of unfair self-preferencing.
We also know that these companies can collect a lot of data about companies that rely on their platform – data which they can then use, to compete against those very same companies in other markets. That can seriously damage fairness in these markets – which is why our proposal aims to ban big gatekeepers from misusing their business users’ data in that way.
These clear dos and don’ts will allow us to act much faster and more effectively, to tackle behaviour that we know can stop markets working well. But we also need to be ready for new situations, where digitisation creates deep, structural failures in the way our markets work.
Once a digital company gets to a certain size, with the big network of users and the huge collections of data that brings, it can be very hard for anyone else to compete – even if they develop a much better service. So we face a constant risk that big companies will succeed in pushing markets to a tipping point, sending them on a rapid, unstoppable slide towards monopoly – and creating yet another powerful gatekeeper.
One way to deal with risks like this would be to stop those emerging gatekeepers from locking users in to their platform. That could mean, for instance, that those gatekeepers would have to make it easier for users to switch platform, or to use more than one service. That would keep the market open for competition, by making it easier for innovative rivals to compete. But right now, we don’t have the power to take this sort of action when we see these risks arising.
It can also be difficult to deal with large companies which use the power of their platforms again and again, to take over one related market after another. We can deal with that issue with a series of cases – but the risk is that we’ll always find ourselves playing catch-up, while platforms move from market to market, using the same strategies to drive out their rivals.
Of course, we’re not the only ones who face problems like these. Just a few weeks ago, the Judiciary Committee of the US House of Representatives published a very interesting report on how US antitrust law can deal better with problems like this. And on this side of the Atlantic, many national authorities have powers in this area – powers that allow them to investigate markets, for instance, or to make sure that companies which aren’t dominant deal fairly with the smaller businesses that depend on them.
The risk, though, is that we’ll have a fragmented system, with different rules in different EU countries. That would make it hard to tackle huge platforms that operate throughout Europe, and to deal with other problems that you find in digital markets in many EU countries. And it would mean that businesses and consumers across Europe can’t all rely on the same protection.
That’s why the second pillar of the Digital Markets Act would put a harmonised market investigation framework in place across the single market, giving us the power to tackle market failures like this in digital markets, and stop new ones from emerging. That would give us a harmonised set of rules that would allow us to investigate certain structural problems in digital markets. And if necessary, we could take action to make these markets contestable and competitive.
Because we’ve come to a point where we have to take action. A point where the power of digital businesses – especially the biggest gatekeepers – threatens our freedoms, our opportunities, even our democracy. And where the trust that successful digitisation relies on is becoming seriously frayed.
So for the world’s biggest gatekeepers, things are going to have to change. They are going to have to take more responsibility, for the effects that they have on our safety and our opportunities. The new rules that we’ll propose in a few weeks will give them that responsibility – they’ll also make sure we have the powers to enforce those duties. So that we can promise Europeans a safe, fair, trustworthy digital world, for the decades to come.