Germany and Great Britain together garner nearly 50 percent of the total online market share in Europe. Although electronic commerce has considerable potential, there are significant barriers to the development of the Internet as a viable marketplace in Europe. One such barrier is the network infra-structure. Nearly 60 percent of all Internet traffic from Europe is still sent via systems based in the United States. This problem is compounded by high Internet node connection costs, which can be as much as 16 times greater in Europe than those in North America.
High costs are likely to deter cus-tomers and corporations from electronic commerce.
As heavily regulated European telecommunications firms continue to increase the price of node connec-tions, the Internet's geographical center will remain in the Unites States. Electronic marketplace potential may also be curbed by customs duties on electronic transmission and orders. Taxes, especially discriminatory taxes, could discourage growth. The EU member states have not endorsed the imposition of new tariffs, but they are working to apply existing tax laws to online commercial transactions. Critics of such measures insist that applying territorial expectations to the Internet could ruin its commercial potential.