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EU’s Plan to Beat Silicon Valley

European leaders yesterday unveiled a plan for creating a “digital single market” across the EU, with provisions for harmonizing copyright, tax, and e-commerce rules in the 28 country bloc. The Wall Street Journal:

Jean-Claude Juncker, president of the European Commission, the EU’s executive arm, said the plan would “lay the groundwork for Europe’s digital future.”

“I want to see pan-continental telecoms networks, digital services that cross borders, and a wave of innovative European startups,” he said.

While the move was officially being hailed as an important step on both sides of the Atlantic, there is growing unease in Silicon Valley that the initiative would be used to disadvantage U.S. tech companies in Europe. As the Journal goes on to note, there’s reason to worry.

At the heart of the project is Europe’s battle against the dominance of U.S.-based Web companies. The plan calls for several major inquiries into possible abuses by U.S. companies, including a “comprehensive analysis” of the role of online platforms such as search engines and price-comparison websites, as well as a previously signaled investigation by antitrust regulators into whether e-commerce companies such as Amazon.com Inc. are restricting cross-border trade.

A representative from the U.S. Chamber of Commerce told the FT that he feared the EU would not favor the regulatory “light touch” that has allowed the vibrant tech ecosystem in the United States to flourish. “It feels like they’re trying to protect an old way of doings things,” he said. Tech executives also pointed to the EU’s recent suit against Google for anti-competitive practices as a troubling precedent.

We’ll see how this plays out. If the EU does indeed proceed in this protectionist fashion, it certainly will be not doing itself any favors, since the true reason for the lack of technological behemoths springing forth from its soil has little to do with the supposed anticompetitive behavior of American companies. Indeed, for Europe to gain the upper hand in the innovation race, it will have to do a lot more than just harmonizing regulations across its various jurisdictions. It will need to address the deep-seated issues with culture and employment law that prevent it from keeping up with the tech revolution.

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