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Working with tech firms will create a brighter European digital future


11 Dec 2020


Innovation & Enterprise
By Andrew P Goodwin, Director of Applied Economics, Europe & Middle East at Oxford Economics

The revolution in digital technologies has transformed social and economic activities across the western world at unprecedented speed and scale, delivering immense opportunities but also posing some challenges.

To build trust online, keep the internet safe, and tackle illegal content, the European Union is working to create new rules on digital services companies’ responsibilities. The upcoming Digital Services Act (DSA) will affect European citizens and businesses that use these online capabilities for decades to come.

Oxford Economics carried out in-depth research into the contribution that digital services make to the European economy and the steps that digital services companies are already taking to keep the internet safe. The report has identified three key benefits.

Firstly, digital services make a very significant contribution to Europe’s economy and society. In fact, the European Commission has estimated that in 2019 there were more than 10,000 digital platforms in Europe, the vast majority of them small and medium-sized enterprises (SMEs).

Online platforms are an important source of revenue and jobs in their own right, but also support much wider “ecosystems” of businesses and individuals who use the platforms. For example, the Android app ecosystem supports €11.7 billion of revenues for European developers and more than 1.4 million jobs.

Secondly—and perhaps even more importantly—digital services reduce barriers to growth for SMEs across all sectors of the economy, enabling them to immediately access infrastructure and customers without needing to make large up-front investments. Digital services also support cross-border trade within the EU and beyond. For example, Facebook apps and technologies helped EU businesses generate an estimated €98 billion of international sales in 2019.

Finally, digital services bring important benefits to consumers. Shopping online brings greater choice and convenience, and lower prices. Many digital services such as search engines, online maps, social media, and communication tools are free to use. And COVID-19 lockdowns during 2020 have led Europeans to turn to digital services to an even greater extent, whether to work, study, shop, or stay in touch with loved ones.

Taking all these benefits into account, and with technology developing at breakneck speeds, it is natural that bad actors will try to exploit these systems, and platforms have been abused by small numbers of users for illegal purposes such as spreading illegal hate speech or selling counterfeit goods.

Digital services providers have recognised these challenges and engage in a range of initiatives to address them. Platforms remove millions of pieces of illegal or harmful content every year and in many cases they proactively remove material before it is reported by users. For example, YouTube reports that between July and September of this year it removed 7.9 million problematic videos—43% of these had not been viewed, and 76% had received fewer than 11 views. And in the second quarter of this year Facebook took action against 22.5 million items of content for reasons related to hate speech—94.5% of these were identified before users reported them. 

Digital marketplaces work with brand owners to counter the sale of counterfeit goods. Measures include: brand registration programmes to more quickly identify fakes; streamlined procedures to facilitate reporting; and using technology to track individual products from seller to marketplace to end-consumer.

DSA can add value

This is where the DSA can deliver real value to European citizens. Our report has identified a number of points we believe the European Commission should consider as it designs the new rules. In its approach to illegal content, policymakers will have to balance the new obligations with the need to protect users’ rights of freedom to do business and freedom of speech.

Policymakers across the EU should acknowledge that differences in rules between EU Member States create complexity for online platforms and those who use them. It is important that any new rules are harmonised across the EU so that businesses can continue to capitalise on the benefits of digital services in facilitating access to the entire Single Market.

Many measures are already in place and digital services providers currently work individually and in collaboration with others to tackle illegal content. It would seem logical that any new rules should seek to build on these existing frameworks, rather than start from scratch.

But effective measures will only come through cooperation. The increasingly blurred distinction between the online and real world means that collaboration will be essential in order to effectively tackle online dangers. In fact, some of the most successful examples of initiatives to tackle illegal or harmful content have emerged where digital services providers work closely with others, including governments, civil society organisations, users, and rights holders.

By working together these groups can address the challenges and build a brighter digital future for Europe.