The next two years will define the next 20 for Europe’s internet economy
European policymakers have proposed the most comprehensive regulations for the internet ever. At stake are not just the parameters within which companies like Facebook operate in future, but the experience Europeans have when they open their phones or fire up their laptops, the competitiveness of European companies, and the potential for future Googles or Alibabas to emerge on European soil.
Getting this right matters. Europe’s new Digital Services Act (DSA), Digital Markets Act (DMA), and the recently proposed AI regulations, are a big deal for all European businesses and all businesses that operate here. Legislators estimate it might take a couple of years for the new laws to be finalized. What happens in the next two years will define the next 20 years.
And Europe is not alone. Governments around the world are putting forward proposals on everything from privacy and content, to how data can be held, shared and used at scale. This is a good thing. Many of these issues are too important to be left to private companies alone, which is why Facebook has been publicly advocating for regulation in a number of areas for some time now.
As policymakers start to draft laws, it’s increasingly clear there are contrasting visions of what the internet should be. In Europe, policymakers want to preserve an open, universally accessible internet, with safety and respect for human rights at its heart. Likewise, President Biden has called for a global alliance of “techno-democracies” to protect these values. Together, the US and EU could create the foundation for a wider global consensus. But we can’t take the open internet for granted.
The Chinese model — segregated from the rest of the internet and subject to extensive surveillance — presents a risk to the open internet as we know it. Other countries, including Vietnam, Russia and Turkey, have taken steps in a similar direction. In India, the world’s largest democracy, regulators have published rules that expand the government’s ability to direct social media platforms to trace and take down content, including private messages.
The push for greater transparency and accountability that motivates much of the proposed EU legislation is fundamentally right and welcome. It’s wise to seek to hold large platforms to account through things like greater data reporting and auditing of systems, rather than micromanaging individual pieces of content. It’s right that accountability should have teeth and there should be sanctions. And it’s reasonable to impose different and stricter obligations on larger platforms than smaller startups.
It’s in this spirit of transparency and accountability that Facebook has taken a number of significant steps already. We publish regular transparency reports showing how effective we are at identifying and removing violating content, and how often people see it. And we’ve appointed EY to audit these to ensure we’re not marking our own homework. We’ve also recently published detailed guidance on how our personalized recommendations work, and announced new measures to give people more insight into, and control over, how content is ranked in their News Feeds.
We’ve also created a number of mechanisms for sharing data that are in line with the requirements of the DMA and the DSA — from open source AI tools, and products like Facebook Business Suite to support businesses, to tools that share insights with researchers.
As they debate and amend legislation, policymakers need to avoid two unintended consequences: unnecessarily stifling European innovation; and inadvertently accelerating the splintering of the global internet.
Some of the DMA’s fine print suggests policymakers could find themselves deep in the weeds of product design — for example, there are detailed provisions for how users should log in to different apps — in a way which risks fossilizing how products work and preventing the constant iteration and experimentation that drives technological progress. And proposals designed to prevent big companies ‘self-preferencing’ by using their own services to close off markets are well-intentioned, but would benefit from a consumer benefit test to ensure they don’t shut out newcomers who would deliver cheaper and better services. Companies branching into new markets can be good for competition — look at Orange launching Orange Bank to compete with banks, or broadband companies offering TV services to compete with broadcasters.
While some areas of the DMA are overly-prescriptive, there are others where legislators could go further to promote a dynamic and evolving digital market and break down data silos — for example, guidance on how data could be shared safely between companies while respecting individual privacy.
As lawmakers around the world look for solutions at the same time, I hope they will learn from each other and avoid building regulatory silos, especially ones that prevent the flow of data across borders. Seamless data flows are the lifeblood of an open internet. But we’re already seeing signs of these siloes emerging. Recent European court rulings have thrown data transfers between the EU and US into doubt. And provisions in the proposed regulations allow for local laws that undermine the greater value of harmonizing rules across the EU — effectively allowing member states to create their own mini-DMAs and DSAs. Protecting our economies by ensuring the free flow of data between the EU and US should be an urgent priority on both sides of the Atlantic. It would be a shame if good intentions led unwittingly to the splintering of the internet.
To protect a truly global internet, the more rules are designed to be complementary at a global level the better. It’s vital that talks continue in the G7, in the OECD on digital taxation, in the new Transatlantic Trade Council, and in other international bodies.
It remains the case that the single biggest thing the EU could do to make its tech sector more competitive is complete the digital single market. The beauty of the European project has always been that the whole can be greater than the sum of its parts. But a startup in Madrid or Helsinki still has to navigate different intellectual property laws, licensing rules, and obstacles to the delivery of goods in order to sell across the EU, whereas a rival in the US or China can operate seamlessly across their domestic market.
A report last year found Europe produced more than a third of the world’s startups in the last decade, but only 14% of the so-called “unicorns” valued $1bn or more. Removing barriers within the Union will be better for Europe’s economy than erecting new ones.
Europe has long been a pioneer in internet regulation, but lags behind China and the US in building world beating global tech companies. As the EU creates its most ambitious digital legislation yet, it faces a choice: it can either fall behind the US and China for good, or it could create the conditions for European tech to thrive for years to come.
This op-ed was originally published in NRC Handelsblad on 30 May 2021.