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June 22 — The European Union's push to establish a Digital Single Market would lose one of its strongest proponents if the U.K. votes to leave the bloc, EU and industry officials told Bloomberg BNA.
U.K. voters will decide whether to pursue the so-called Brexit in a June 23 referendum. The country has been active in efforts to break down cross-border barriers that have hindered the EU's digital economy during the past two decades. Some EU officials are concerned that a U.K. exit would shift momentum to countries interested in protecting domestic enterprises from Silicon Valley competition, rather than pursuing market changes.
The EU wants to develop the Digital Single Market to allow online services to flow freely through the EU. It has been a priority of the current European Commission since it took office in 2014.
Digital Europe—a Brussels-based trade association whose members include tech companies from the U.S., Europe and Asia including Apple Inc. and Amazon.com—has been lobbying intensely on a wide range of pending legislation related to the Digital Single Market, including copyright reform; digital infrastructure issues such as spectrum re-allocation and faster 5G mobile networks, which will enable the Internet of Things; data flows and digital consumer protection measures.
Digital Europe Communications Director Paul Meller said the association sees the U.K. vote as pivotal.
“If the U.K. were to leave, the EU would lose one of its most important allies when it comes to an enlightened regulatory approach towards the DSM,” Meller told Bloomberg BNA. “And the EU would be more beholden [to] countries such as France that favor a more precautionary, protectionist approach, instead of one that promotes innovation. Without the U.K., Europe would clearly lose some of its zeal for reform.”
Meller cited a France- and Germany-sponsored European Parliament resolution calling for search engines to be turned into a national utility as an example of a digital regulatory approach against which the U.K. has been a buffer.
Some parliamentarians say the exit of the free-market proponent U.K. would have some benefits when it comes to the Digital Single Market.
“On a range of DSM issues, the U.K. government consistently takes a pro-market position and this always comes at the expense of consumer protection and cultural diversity,” Sylvie Guillaume, a French Socialist and member of the European Parliament, told Bloomberg BNA. “So, as we construct the proper framework for a DSM, if the free market forces led by the U.K. have less power that would help us to curtail the power of Silicon Valley in the EU.”
The U.K. role in the digital single market debate is directly related to it being the most “mature” electronic commerce market in the EU, according to recent studies by Ecommerce Europe, a Brussels-based trade group.
“The U.K. is in the lead when it comes to the size of their market and the average spending per e-shopper,” Ecommerce Europe official Felix Ludvine told Bloomberg BNA. “A Brexit would therefore have an immense impact on the fate and outcome of the EU's current plan for a digital single market. By vacating a seat at the decision-making table on key issues such as geo-blocking, regulations for online platforms, parcel delivery issues or payment methods, there would be a power shift that would likely lead to more conservative outcomes.”
Officials also see the U.K.'s presence in the EU as crucial to the telecommunications sector. Without the U.K. market, they say, the bloc will not have the scale needed to establish next-generation mobile networks and keep up with U.S. and Asian competition.
“In tech and telecoms we compete at a global level,” Alessandro Gropelli, spokesman for industry group the European Association for Telecoms Network Operators, told Bloomberg BNA on June 22. “With the U.K. fully participating in the EU project all citizens and businesses will benefit from the EU digital single market, which is a key driver for GDP growth.”
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