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THE STATE OF THE EUROPEAN UNION
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European businesses in the digital sector can be
seen as indicative of an increasing absence in
the world economy. Since the appearance of
the digital world, and of the internet in particu-
lar, we have seen how disruptive innovations
have changed the competitive situation in a
wide variety of sectors, in some cases complete-
ly redefining them. Failure to correct this situa-
tion would lead Europe facing losing its historical
added value, which would be instead captured
by foreign companies.
If we analyse the causes of this situation, we
can identify the absence of a single market
(with a single regulatory framework) as a nega-
tive factor for the development of paneuropean
companies, particularly those related to the in-
ternet and the provision of transnational ser-
vices. The majority of internet companies are
based on what is called ‘zero marginal cost’: in
other words, once a certain level of users has
been reached, the additional cost to the com-
pany of providing services to another user tends
towards zero, in contrast with the income gen-
erated by this user. As a result, it is important for
companies to reach a critical mass of users, and
to do this they need to access large markets,
operating on a global scale in search of the
maximum number of potential customers. The
Internet is also used by the remaining compa-
nies as a means of advertising and selling their
products that gives them access to a far larger
potential market than can be accessed through
traditional channels.
However, this need for large markets is in
contrast with the reality in Europe, where there
is a political union but no regulatory one in
many areas. In practice, these means that com-
panies have to adapt to different regulations to
operate in each state, a situation that translates
into inefficiencies and higher costs. This situa-
tion contrasts, for example, with the United
States, which dominates the internet economy,
where a single set of regulations makes it pos-
sible to offer services to over 300 million people
in the same language.
The concept of the Digital Single Market is
the response to this problem. Although Europe
is one of the largest markets in the world, it lacks
powerful internet businesses, and as the internet
grows to encompass more areas of our econo-
my, it becomes increasingly important for us to
reverse this situation. At the same time, unifying
regulations, improving connectivity and creating
a Digital Single Market will enable other compa-
nies to become more efficient and to expand
their potential market to all Member States.
To sum up, achieving this Digital Single
Market would facilitate the provision of services
throughout the European Union, eliminating the
administrative barriers and costs associated with
the need to adapt services to the regulations of
each country. The result would be the creation
of a true single market, capable of generating
the economies of scale needed for the creation
and consolidation of the companies that gener-
ate growth and employment in Europe, and
enabling European companies to compete both
at the European and at global level with major
American and Asian companies.
To address the creation of this Digital Single
Market, 28 specific tasks have been defined
with the objective of unifying regulation with
regard to telecommunications, copyright and
data protection, management of radio spec-
trum, and application of competition law, in
order to create a genuine Digital Single Market.
Summary of 2014
During 2014, actions have been taken in a
range of fields with the aim of harmonizing