„We have seen that the General Data Protection Regulation is not so easily enforceable. We thought that it would move the locus of power back into the hands of citizens but it did not. It still rests with huge corporates.”, says Jan Zygmuntowski, an economist associated with the Instrat Foundation and Kozminski University.
Wojtek Łobodziński, EURACTIV.pl: How would you briefly describe the relations between the European Union and the digital market? Are Digital Service Act (DSA) and Digital Markets Act (DMA) something brand new in this relationship or have they been long expected in the light of the European legislation?
Jan Zygmuntowski: Twenty years ago the European Union introduced the e-commerce directive. That was the first landmark regulation related to the digital space, but since then the Internet at the broader digital economy has in fact undergone a huge revolution. Market structures, business behaviors, user vulnerability, and we as the citizens have dramatically changed. In the early 2000s, digital markets were highly fragmented and they were viewed by the light of the dot-com bubble. Everyone was regarding the Internet as something that is not a part of the economy as we know now but as something that is not even viable as a business model and something that is not the key strategic sector itself.
Six years ago we had the establishment in the EU of the digital single market. It finally received the recognition that there is also the digital part of it. Since then there was also General Data Protection Regulation (GDPR), protecting personal data. The more time passed, there was a stronger recognition that in fact, we’re not talking about enabling business in the digital space, but also that since there’s so little regulation in this space and it’s like a capitalist free-market utopia, it became overrun with huge corporate interests. It meant very strong, horizontal, vertical connections, mergers, and acquisitions.
We’ve seen the GDPR is not so easily enforceable. We thought that it would move the locus of power back in the hands of citizens and it did not. It still rests with huge corporates. We’ve seen an erosion of innovation, erosion of competitiveness, and lack of strategic autonomy and digital sovereignty of the member states of the EU. So there was a very strong expectation, especially in the past two years for some regulation to happen and since the e-commerce directive, not many comprehensive regulations have been introduced.
What will change after introducing the changes currently proposed by the EU from the perspective of the common folk and what from the perspective of the digital platforms?
The Digital Services Act package is a necessary step that builds on the previous GDPR. It will help our legislation and environment to step up to this reality of the digital economy. From the perspective of the common folk, there will for sure be some kind of better enforcement of the GDPR. We need more responsibility in terms of moderation of content. We’ve seen all the fake news, toxic hate speech, etc. January 2021 was a very strong reminder of what happens if we leave the content moderation solely in the hands of corporates. Here we expect that the DSA and especially DSM will allow us to compete on much more fair terms of the level of displaying field for different players.
So our perspective is that at least we wish to stop the erosion of competitiveness. We’ve seen that digital platforms, especially big techs have been swallowed spaces of the public sphere, from speech to health care in response to COVID-19 especially. We want this approach of the so-called surveillance capitalism to be countered very strongly by the framework which tells you that cannot do some things and you need to open your services to innovators. We need to set common standards that will be protected in the entire EU and will not allow for the erosion of the European values.
From the perspective of the biggest digital platforms, the Big Techs, the GAFA, it is some kind of setback. They have been moving fast and breaking things for so long that set them back protects us from being broken. It means also that we hope that the platforms will start taking serious responsibility for what they are doing. Fining them for good, for example, reviewing the algorithms they want to deploy.
We need transparency that allows for greater responsibility. Greater setbacks for the big players, for the significant players in this field, very often mono or oligopolists means actually fewer setbacks and stronger competition for the entire rest. If we speak in geopolitical terms or geographic terms, most of those companies are from third countries, they are not EU based.
What is behind the concept of digital sovereignty?
For sure it’s a policy buzzword, an empty signifies that you can fill in with your ideas. But if we try to reduce it to the most simple terms, digital sovereignty would be the capacity of differently associated actors who influence or shape the development of the digital technologies, according to their needs, to their own plans.
The person that decides how to develop and how to implement technologies is the sovereign in this digital space. Lawrence Lessig has once said that the code is the information and communication technology (ICT) version of the law. This is actually what starts shaping the economy, the society, the choices of other actors. So in these terms code is the law. So whoever writes that code or reviews that code is effectively creating a new legal infrastructure.
After what happened with Donald Trump’s accounts, there is this concept that we can regulate or enforce stronger free speech by having 24 hours courts in Poland. This is the current conservative government’s idea that you can appeal to any kind of decision of the platform. For sure the idea of appealing from bans is good in any democratic society. For every decision that you need to submit yourself to, you need to have an appeal step. This is our understanding of rule of law, so for sure the platform has been breaking this. They have been the sovereigns saying that you can’t appeal from their decisions and their decisions are final. So to introduce the appeal step, you say, we as the public believe that our digital sovereignty is that you have to submit to the rule of law and how we understand democracy.
On the other hand, if you want to establish such a mechanism it is very hard for a platform that has 2-3 billion people, to establish these procedures for one country. It’s not impossible but if you try to negotiate very strong rules that completely change these community standards and if you try to shape them in a very significant manner having a member state of fewer than 40 mln people and negotiate as a powerful block on our planet of almost half of billion people, then it’s a very difficult negotiating power.
I think when we talk about digital sovereignty and the shaping of technologies, you can enforce a lot of basic standards, like your labor law on the national level. If you want to significantly shape and change the entire structure of today’s internet, we need these regulations on the European level and we need this kind of Brussels effect to spill on those platforms and from them to shape the Internet once again.
In the contributions to public consultations submitted by Instrat Foundation, you suggested adopting a more complex approach, including trading platforms at public infrastructure, mandating full interoperability, and introducing a new European regulator for the European digital single market. What shortcomings of the current proposition are you aiming to fill?
Our contributions were robust and complex. It opened up space where a lot of think-tanks like ours thought „it’s time to really think what kind of digital economy we want”. From that point, we’ve seen the proposals of softened version in the draft legislation. It raises the question of whether the European Commission can draft regulations that serve the public interest. Firstly, because it seems that their meetings with big tech lobbies became really influenced by who they let in through the doors to comment their versions. The proposal is still ok, but there’s a little bit of disappointment.
We as Instrat Foundation, definitely expect the European Commission to step up again and listen to the voices of experts. A lot of things have been completely dropped. For example, the tailor-made remedies for these platforms which are not a general set of rules but the possibility to come for example to Google or Facebook and say „we’ve seen that you’re doing this one thing that is very detrimental to people’s safety and market and you need to change them”.
I think we need to start seeing platforms as public infrastructure. We have this tendency through network effects, for building natural monopolies. But it’s not the only sector that has these natural monopolies. For example the energy markets, the transmission system operators, the classic telecommunications like phone, railways. We know already how natural monopolies work and we’ve been regulating them in the European Union in a very strong way and shaping the markets to what they should look like. We should try to take a look at these remedies that we already know and implement them in the digital market.
To speak in simple terms, you take Facebook, you take out the entire database of people, their phone numbers, all other personal data. You take it out, establish it as a separate company without any vertical integration as a separate company, make it a very highly regulated or even state-owned or EU-owned organization or institution. Then you also enforce it to use API, so other services like Facebook can still remain operational if you want to use this kind of interface. It’s a very strong intervention in the market but it’s one that we’ve already seen in telecoms, railways, and in the energy market. So it’s not that new. The newness is that they’re not European companies but maybe it’s time that we really think about this interoperability. It will allow to securely keep track of what is happening in the infrastructure, make it a public utility, low margins, open standards.
Then you enforce this interoperability for innovators, for this boom of small modules and pluggings to step in and try to rebuild this economy as a kind of movement of innovators and entrepreneurs once again moving in this space. I think that this is the part that we’re missing.
Do you see anyone who represents your approach when it comes to the political stage?
Seeing the version of DSA and DSM I have a little bit less hope in Margrethe Vesager. She was seen as an amazing face of competition champion but now it feels like her ideas watered down. Maybe she just had too much influence and was too open to listening to what the market says. When you want to know what the market says you actually listen to the ones who have the most money on the market, pay different think-tanks, different experts, create a lot of content, organize huge cool podcasts, forums etc.
I find myself unexpectedly seeing Thierry Breton in a better light. I expected that he would be a voice of big European tech, but especially focusing on creating European champions. I was afraid that this approach isn’t what serves our society best. It actually serves in the global view middle-sized companies based in Europe that want to become bigger or want to become European Googles or Facebooks. We don’t need it, we need to innovate and create great conditions for everyday citizens.
I see especially the experts, NGO’s that are fighting this narrative war with big tech as the key change-makers. The European digital rights initiative, Instrat, European Horizon, Panopticon here in Poland. We’re not politicians but we enter the political stage and we advocate for some things. I need to say that in academia I see a lot of people who are interested in the economy through people who stay very much in the competition law to even people who are very much into constitutional rights. So I’m not sure if there are very active politicians in the center of what is happening, who have such a long term vision and really understand this unique combination of being pro-innovation and pro-technology, but at the same time understanding that we need to build this digital economy in Europe in a completely new way.
We need to see what is the future of the digital economy that we would like to have in Europe in ten years and then think what are the steps that would need to happen so that it would go that way. How do we manage data as a common good, how do we create this ecosystem that is very open and interoperable.