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EU digital single market strategy to involve investigation into online platforms, says report

The European Commission will launch a comprehensive assessment of the role of online platforms including search engines, social media and price comparison sites by the end of 2015, as part of its digital single market strategy. 01 May 2015

A draft copy of the digital single market strategy has been published by the Financial Times. The plan is not due for release until 6 May.

The draft report said that the Commission will look at transparency in search results, including whether links and adverts are paid for; at how platforms use the information that they gather; and at constraints on individuals and businesses who want to move from one platform to another.

"Although their impact depends on the types of platform concerned and their market power, some platforms can control access to online markets and can exercise significant influence over how various players in the market are remunerated," the Commission said.

"Some online platforms have evolved to become players competing in many sectors of the economy and the way they use their market power raises a number of issues that warrant further analysis beyond the application of competition law in specific cases," it said.

Earlier this month, the Commission said it believes Google has abused a dominant market position by "systematically favouring its own comparison shopping product in its general search results pages".

It claimed Google promotes its Google Shopping service "more prominently" in its search index than rival services. The competition authority issued the search giant with a statement of objections and claimed the company had acted in breach of EU competition rules.

Under the digital single market strategy the Commission will also look at how to tackle illegal content on the internet, propose a public-private partnership on cybersecurity, and review the existing ePrivacy Directive to ensure protection for users and a level playing field for all businesses, it said.

The digital single market strategy aims to create a market with free flow of goods, people, services and capital. Individuals and businesses should be able to access online products and services under "conditions of fair competition and a high level of consumer and personal data protection", the strategy document said.

The Commission has identified five areas where work is needed to create this single market:  cross-border e-commerce rules that consumers trust; affordable, high-quality cross-border parcel delivery services; unjustified geo-blocking – where consumers in one country cannot access the same websites as those in another; a copyright framework that gives better access to digital content; and reduced complexity in VAT.

ICT networks also need to be improved, the Commission said.

"Today, the sector is undergoing structural changes and still suffers from isolated national markets, a lack of regulatory consistency and predictability across the EU, particularly for radio spectrum, and under-investment," it said.

These problems are not likely to be resolved by the telecoms single market package that us currently under discussion, it said. The Commission will therefore review all of the existing legislation and make proposals for change.

Digitisation of all sectors is important if the EU is to maintain its competitiveness and keep a strong industrial base, the Commission said.

"Within a decade, most economic activity will depend on digital ecosystems," it said.

Big data, cloud services and the internet of things will be central to success, and a fragmented market does not provide the scale needed for these to reach their full potential, the report said.

A series of technical and legislative barriers will need to be removed, if the EU is to benefit fully from the potential of technology, it said. In 2016, the Commission will propose a "Free flow of data" initiative that tackles restrictions on the free movement of data for reasons other than the protection of personal data, and "unjustified restrictions" on the location of data.

The Commission will also launch a European cloud initiative looking at cloud services certification, switching of providers and a research open science cloud, it said.

Interoperability and standardisation are needed to allow e-government services to communicate with one another, and the European interoperability framework put forward in 2010 should now be updated and extended.

Digital skills must be improved across the EU, to ensure citizens can use new services that are offered, the Commission said. Member states "urgently need to address the lack of essential digital skills" in employees and job seekers.

More also needs to be done on the use of technology in public services, to modernise public administration. A new government action plan for 2016-2020 will include mandatory interconnection of business registers by 2017, and work towards a single 'gateway' to all European and national government services. Member states will also need to work towards full e-procurement, and interoperable e-signatures, the Commission said.

"The strategy for a digital single market is about transforming European society and ensuring that it can face the future with confidence," the Commission concluded,.

Once the strategy is published, it must be endorsed by the European Parliament and Council,.