Leading the Charge on Digital Regulation: The More, the Better, or Policy Bubble?

In this paper, Cristiano Codagnone (CEO of Open Evidence) and Linda Weigl examine the EU regulation in the digital domain, arguing that the recent regulatory activism represents a case of a positive policy bubble with an oversupply of policies and legislative proposals. While the current set of proposals is commendable as it provide a stable basis to protect consumers and create a level playing field for European businesses, policy and regulatory parsimony carry its value and there might be a silver lining in striving for better integration between the different pieces adding up to the bloc’s digital policy. According to the findings of the authors, policy framing in terms of digital sovereignty, followed by digital constitutionalism, has influenced policy activism beyond concrete policy instrumentalism, resulting in an increasing complexity of policies and regulations that lack coherence and consistency.

While preserving fundamental rights, protecting consumers and businesses, ensuring contestable markets, and an open, democratic society are among the declared goals of much of the policy documents and legislative proposals reviewed in the paper, there is also the side effect of overregulation and mismatch between declared objectives and reality. The ambition to strengthen digital and technological sovereignty in all domains, even when this seems unrealistic (i.e., the case of Chips) or when there is nothing upon which to take back control (i.e., because Europe never had such control, as in the case of online platforms), appears as a new form of policy voluntarism with a techno-Gaullism bent.

Digital sovereignty and digital autonomy do not come for free and require strategic policy decisions on the allocation of scarce resources across a wide range of actions. It seems as if the Brussels Effect euphoria has convinced EU policy-makers that sovereignty and autonomy can be gained by regulating others, which is questionable. Autonomy and sovereignty require the building of capacities and innovation in the various digital domains. The AI Act, for instance, will regulate high-risk systems and protect individuals, but in itself does not ensure that European AI firms will become more innovative and will increase in number so that Europe will achieve a dominant position. It is highly possible that the newly proposed acts protect fundamental rights and uphold European values and principles in the digital domain, but it is unlikely that they will create the needed capacities and innovation. It remains doubtful that the DSA and DMA will place Europe in a dominant position with respect to foreign tech giants to create new sources of sovereignty and autonomy for Europe in the data economy. The Data Strategy together with the DGA and DA have the goal of creating new data spaces where European citizens and businesses are in the driving seat. This requires mora data exchanges between businesses (B2B), from businesses to public authority (B2G) or vice versa (G2B). Yet, such exchanges will not simply occur because of new regulation, as they depend on the structure of incentives and on clear business models that are yet to emerge. The side effects of digital policy activism at the EU level include the risk of increasing the administrative burden, especially for SMEs, and stifling innovation, as well as creating more uncertainty due to regulatory inconsistency and lack of coherence.

Link: https://link.springer.com/article/10.1007/s44206-023-00033-7