ISSN: 2736-6065

“Digitising Europe” is the new ELF Blogposts series that engage with policymakers, industry experts, and academics in order to contribute to a better understanding of how technological change is also driving social, political, and regulatory affairs. Understanding ongoing processes in Cyberspace, regulatory framework of digital market, digital platforms, space, Artificial Intelligence and how those new technological advancements impact our societies is essential to gauging and mitigating the impact of new technologies on our societies.

By Gérard Pogorel, Professor of Economics Emeritus, Institut Polytechnique de Paris, Telecom Paris.

With the Digital Services Act, the EC is formulating a comprehensive regulation of digital services (DSA) and markets (DMA). The design process has emphasised multiple objectives. The Digital Services Act package touches upon fundamental rights, from data privacy, property and portability to protecting European citizens and consumers from abuses.

Establishing a level playing field opens markets and promotes freedom of choice, competition, and innovation in the digital area. It makes easier the emergence of new European actors on a scale comparable to the GAFAM. As has been the case for GDPR, it features Europe as a beacon of the rule of law and democracy. It notably highlights EU autonomy, auto-nomos, setting its own rules, and defining European digital sovereignty conditions.

1 – Source: European Commission

Since the advent of the current globalisation phase, it has often been wondered whether multinational companies are a-national, cosmopolitan entities or if they tend to replicate wherever they operate the legal framework of their headquarters’ location. The answer to this question has been too obvious. Their country of origin influences their policies, strategies, behaviours, the rules they apply, and this affects the consumers and the populations of the countries they operate in. Even if Europe and America pride themselves on sharing the same moral values, history and national interests have significantly shaped legal preferences and created divergences regarding the interpretation of freedom of speech. This has proved particularly contentious in the age of digital globalisation. It was long overdue for the EU to put into law its sovereign considerations, applicable to any company operating in Europe, on top of the competitive framework which informs the European internal digital market.

Our fears regarding digital services today deeply echo the concerns of the liberal founding thinkers. Undeniably, and without fear of anachronism, digital services in the 21st century precisely affect what Benjamin Constant introduced in his 1819 conference “De la liberté des anciens comparée à celle des Modernes“^[1] as the cardinal definitions of individual and political liberties. We could safely say that if Benjamin lived in 2021, he would add to the dangers of the eminent, intrusive power of the State the strong social powers that corporate organisations can exert on individuals. Digital services certainly have made possible access to knowledge and information we could only dream of a century ago. But there was a rub. They certainly have huge positive benefits, enlarging the area of knowledge, freedom of speech and other freedoms. They also have adverse effects, exposing each person to biased or erroneous ideas, with only weak means of sorting facts, true and alternative. They also expose each person to harmful lies, libels, threats, hate speech on a potentially massive scale, contributing to jeopardising one’s reputation and life. Digital services affect individual liberties (La liberté des Modernes) and political liberties (La liberté des anciens), both pillars of representative democracies. Benjamin Constant sounds so prescient when he warns us  that “[t]outes les actions privées sont soumises à une surveillance sévère”^[2]. Digital services also touch upon what John Stuart Mill coined in 1859 as “the struggle between Liberty and Authority” and “a social tyranny more formidable than many kinds of political oppression [that] leaves fewer means to escape, penetrating much more deeply into the details of life and enslaving the soul itself”. The necessity of monitoring and preserve our liberties may be two-century-old but is still undeniable.

We would like to assess here how DSA/DMA relates to two further, very critical issues:

• DSA: Liability and liability exemptions of online intermediaries
• DMA: Relationship with EU innovation and industrial policies

Online intermediaries both in Europe and America have remained, for the most part, exempt from liability beyond the suppression of illegal content. There is now renewed attention for some grey areas regarding the accountability of platforms. The first one concerns content that is harmful yet not illegal. The second one involves offline acts directly incited online. In the pre-Internet era, it was often said: “Words can kill”. The responsibility or complicity of writers, journalists, politicians inciting violence and crimes could and at times has been acknowledged. Social networks are protected from liability in America by Section 230 of the 1996 Communications Decency Act and in Europe by national laws. Recently in America, however, it has been argued that Section 230 should be amended as to allow for platforms to be held complicit for crimes committed offline when their algorithms tweak or amplify user-generated content. The new DSA would only invite harmonisation among member states of due diligence obligations for platforms to respect and establish instruments for sending orders to service providers to the whole single market. In our opinion, it would be advisable to go one step further and at least set the scene for a debate on setting standard codes of conduct and legal criteria.

2 – Copyright: European Commission

Now, where does the Digital Services Act stand in the general context of EU policies in 2021? Many policies, programmes and initiatives covering a wide variety of fields currently contribute to an EU industrial policy, with digital as the main component. It is often presented as a necessary specification of competition principles to digital services and markets. However, there has been a shift in the last decade or so, and the EU does not rely any more on competition for innovation and economic objectives to the same extent. There is now a comprehensive set of high-level concepts, objectives, and policy instruments that seek to improve the scope of the EU’s international relations and economic policies – especially in these challenging times. A broad construct of this European vision includes “Strategic autonomy”, often referred to also as “Open strategic autonomy”, “Digital sovereignty”, Europe’s “Digital Decade”, not to forget Next Generation EU and the European Green Deal. Examples of initiatives with a digital element envelope include cohesion policy, Horizon 2020, the Connecting Europe Facility and the EU Programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME). That collective budget stands at about EUR 200 billion. Besides, the Investment Plan for Europe and the European Fund for Strategic Investments (EFSI) aimed to mobilise at least EUR 500 billion in private and public investment by 2020, all capped by the EU 2021 EUR 1.8 trillion Recovery Plan.

In the meantime, the Commission’s industrial strategies for transforming its manufacturing and digital services sectors are still an ongoing effort for EU institutions. As part of an updated industrial strategy, the Commission is developing an ecosystem matrix providing a complete diagnosis of the entire value and supply chain to identify needs, analyse business cases, and define KPIs. A European Innovation Council Fund and a European Innovation Council Accelerator implement a highly anticipated hands-on approach by the EU to directly support and fund innovations.

Beyond the Digital Services Act, what the EU needs to do now is to think strategically, think big, think fast. Regarding industrial strategy, particularly in the digital area, risks in developing innovative technologies have to be confronted and accepted among EU members and in cooperation with our allies in America and Asia. Risks cannot be eliminated. They can be selected, shared, and mitigated. EU citizens, as well as our partners, want to illustrate the decisiveness of the EU. It is important to aim to strengthen cooperation in specific projects with strategic partners, both within and outside the Union in the short term in order to achieve maximum efficiency – minimizing risks – while Europe’s digitalization process is ongoing. European sovereignty makes no sense other than in the context of global rivalries. It makes no sense either without a strong, concrete EU-US and EU-Asia Pacific cooperation.”

[1] “Liberty of the Ancients compared to Liberty of the Moderns”.

[2] All private actions are subject to strict scrutiny.

Author bio:

Gérard Pogorel is Professor of Economics and Management‐Emeritus, ENST‐Telecom ParisTech, France. He graduated from HEC Graduate School of Management (Ecoles des Hautes Etudes Commerciales, Paris) and holds a Doctorate in Economics from Université de Paris‐I Pantheon‐Sorbonne. He published numerous articles, books, and reports.