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EC Proposals May Impact Entire Internet Economy

EC Proposals May Impact Entire Internet Economy

Lenard files Comments with European Commission

Contact: Amy Smorodin
(202) 828-4405

December 17, 2015 – The European Commission’s Public Consultation on the Regulatory Environment for Platforms, Online Intermediaries, Data and Cloud Computing and the Collaborative Economy “appears aimed at developing new regulations for a broad swath of the internet economy,” states Thomas Lenard in comments released today by the Technology Policy Institute. The consultation, he added, “potentially implicates the entire internet economy in one way or another.” Moreover, the diversity of platforms, business models and public policy issues involved will make it difficult to assure the benefits of any proposed regulations will exceed their cost.

Lenard, Technology Policy Institute President and Senior Fellow, identifies a number of additional issues with the Consultation:

  • The Commission’s definition of “platform” is overly broad, arguably including almost every enterprise in the online world.
  • Identifying benefits for any proposal will be difficult because the Commission provides no evidence of market failures associated with platforms.
  • Sections of the Commission’s online survey seem designed to generate support for new regulations and gather complaints from businesses who use platforms. “This methodology is likely to yield biased results that are not an accurate guide for policy,” Lenard explains. “Moreover, complaints from business partners or competitors are not, by themselves, evidence of market failure or even wrongdoing. If acted on, they are likely to impede market efficiency.”
  • The consultation on illegal content and intermediary liability lacks a proposed framework for determining appropriate policies for content that includes everything from terrorists’ communications to pirated movies, child pornography and content that is legal in some countries and illegal elsewhere.
  • Concerning the Data and Cloud section of the consultation, Lenard warns that “Measures that impede the flow of data, such as data localization requirements, can be expected to raise costs and reduce consumer welfare in the same way that barriers to trade do.” To realize the full value of data, Lenard urges the Commission to ensure public policy promotes the use and re-use of data subject to legitimate privacy concerns.
  • With respect to the collaborative economy, Lenard advises policy makers to dismantle policies that primarily protect incumbents. Policy makers should also resist applying the rules regulating incumbents to new market entrants; instead the appropriate response should generally be to lower the requirements for incumbents.
    Lenard urges the Commission to ensure any regulatory proposals address a significant market failure, identify how the failure adversely affect consumers, show how the proposed regulation would remedy adverse effects and confirm its benefits are greater than the expected costs. He concludes “such analysis is necessary if the Commission hopes to have a positive effect on innovation, the development of the internet economy and, most importantly, consumer welfare.”

The comments are available on the TPI website.

The Technology Policy Institute

The Technology Policy Institute is a non-profit research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at https://techpolicyinstitute.org/.

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