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Europe’s Digital Wrong Turn

In May, the European Commission announced that it would create a unified digital market of 500 million consumers that would add €415 billion to the European Union’s GDP and create some 3.8 million jobs. Unfortunately, a recent decision on one key digital issue – data privacy – threatens to derail that effort.

STOCKHOLM – When it comes to crafting good digital policy, Europe has failed its first big test. In May, the European Commission announced that it would create a unified digital market of 500 million consumers that would add €415 billion ($463 billion) to the European Union’s GDP and create some 3.8 million jobs. Unfortunately, a recent decision on one key digital issue – data privacy – threatens to derail that effort.

In June, the EU’s home and justice ministers voted to retain significant national powers over the protection of digital privacy, rather than creating a single set of rules that would apply in all 28 EU countries. If the European Parliament approves their proposal, divergent national rules would be reintroduced. Even more worryingly, this would open the door for provisions outlawing the benign, low-risk data mining that drives online advertising.

Online advertising allows EU citizens to access information, educational material, commerce channels, and entertainment sites without paying for them directly, and the amount being spent on it in Europe is growing fast. The industry’s revenues have more than quadrupled since 2006, even as the overall European economy has stagnated. The EU’s privacy crackdown threatens to undermine all of this. Not only will it create an administrative burden through additional costs and bureaucratic hassles; it also raises the real possibility that the new rules will undermine the business model of many of Europe’s most prominent online companies.

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