European Fear of Innovation, Competition Laws Said Key Digital Economy Issues
European companies, consumers and policymakers must "think like an entrepreneur" and stop being afraid of new things, speakers said Tuesday at a Brussels workshop on competition in digital platforms hosted by the European Parliament Industry Research and Energy Committee. European pessimism about innovation is one of several key challenges to the digital economy, said Pal Belenyesi, professor of economics and competition of European integration at John Cabot University in Rome. Another is whether existing competition law is outdated in the digital world, panelists said at the event, which was streamed.
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Conventional antitrust enforcement doesn't seem to be effective in digital markets, although too little enforcement may, while harming consumers and innovation, help newcomers, said Paul de Bijl, regulatory economics professor at the WHU Otto Beisheim School of Management in Düsseldorf, Germany. Competition enforcement should give priority to the dynamics of market entry and innovation and pay attention to interconnections between players at the different platform layers, while protecting consumer privacy and data protection, he said.
The general impression is that new competition policy is needed for the digital market, said de Bijl. It will take up to five years to see what can be applied to the sector, he said. What's hurting Europe's economy is that innovation companies "grow like mushrooms" but mostly in the U.S., said Belenyesi. The digital giants continue to increase revenue every year while revenue falls in Europe, he said. EU bodies should help innovation through incremental deregulation of the telecom sector, competition law, and not being scared of new things, he said.
European Commission officials disagreed that new competition tools are needed. Existing tools must be applied to new markets, said Chief Economist Massimo Motta, saying he spoke personally. But he acknowledged that EU antitrust policy aimed at ensuring free entry to and exit from markets isn't enough for the digital economy, and should be complemented by regulations on labor, efficient credit markets and innovation.
One of the "delicate" parts of the debate is whether the EU has sufficient means to address market dominance in areas such as search and e-commerce platforms and to ensure relatively free market entry, said EC Directorate-General CONNECT Director Anthony Whelan. It's not clear whether there are any perceived shortcomings in competition tools with respect to the digital economy, he said. The question of whether an enterprise is dominant because its customers don't have options remains the same, but what's different in the digital world is the way in which the facts are weighed, he said. There must be some way to satisfy people that the extreme speed of development is matched to how antitrust issues are handled, he said.
Market dominance in the EU is only about whether a company behaves to a great extent independently of its rivals because it doesn't feel pressured by them, said Centre for European Policy Studies Senior Researcher Andrea Renda. The story of the Internet is one of "ups and downs" in which companies have taken the lead in the various layers of the online ecosystem, he said. Policymakers must think about the next market, not about how to replace existing companies with different ones in the same space, he said.
Many new players are taking the lead in the Internet of Things, with room for European entrepreneurship, said Renda. In four or five years, many of today's markets will have to face the information technology wave, he said. Renda cautioned against shutting the door to those developments, saying European entrepreneurship will come.