EUROPEAN COMMISSION Brussels, 10.5.2017 SWD(2017) 155 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on the Mid-Term Review on the implementation of the Digital Single Market Strategy



A Connected Digital Single Market for All {COM(2017) 228 final}



Contents 1.Introduction 1.1. Policy Context 1.2. Reactions to the DSM Strategy 2.A call for timely delivery and effective implementation 2.1. Agreements already reached 2.1.1.Wholesale Roaming and Fair Use Policy Implementing Act 2.1.2.Spectrum – UHF band (including 700MHz band) 2.1.3.Cross-border portability of digital content 2.2. Proposals adopted by the Commission, awaiting co-legislature 2.2.1.Geo-blocking 2.2.2.Digital Contracts (online content & distance sales of goods) 2.2.3.Value Added Tax (VAT) for eCommerce 2.2.4.Copyright 2.2.5.Parcel delivery 2.2.6.Consumer rights enforcement / Unfair Commercial Practices Directive 2.2.7.Audio-visual Media Services 2.2.8.European Electronic Communications Code, BEREC & WiFi4EU 2.2.9.ePrivacy

2.2.10.Enforcement of intellectual property rights 2.2.11.E-commerce sector inquiry 3.Ensuring a fair, open and secure digital environment 3.1. Promoting Online Platforms as responsible players of a fair internet ecosystem 3.2. Developing the European Data Economy 3.3. Fostering a trustworthy cyber ecosystem: Tackling cybersecurity challenges together 4.Managing the digital transformation of our society and economy 4.1. Digital skills and opportunities for all 4.2. Startups and digitisation of industry and service sectors 4.3. Digital innovation for modernising the public services 4.4. Stepping up investments in digital technologies and infrastructures 4.4.1.Towards a Gigabit society 4.4.2.Developing a European Open Science Cloud, High Performance Computing and European Data Infrastructure 4.4.3.Building artificial intelligence capacities 4.4.4.5G 5.The Digital Single Market: Europe’s main asset in the global digital economy and society Annex: Indicative table of EU funding and financing to digital infrastructure and services, as well as skills, 2014-2020 1.Introduction 1.1.Policy Context

The EU economy and European society are in the process of radical economic and social transformation. Digital technologies and the amount of data they create trigger new innovations, products, services, business models, as well as new ways of interaction between people and machines. These technologies change the way citizens and business live, work, communicate, travel and consume. These technologies are already delivering concrete benefits: personalised medicine; wider access to education and culture, by using online services; better digital public services; and allowing consumers to manage how they consume, and even produce energy, with the help of smart grids and smart meters. These are just a few demonstrations of the growing number of tangible benefits these technologies can provide. Beyond these, digital technologies can help to re-industrialise Europe and assist existing industries to modernise their operations and profit from the scale of the internal market. Indeed, new business models using new technologies such as three dimensional (3D) printing, Artificial Intelligence, cloud and the Internet of Things could facilitate the return of manufacturing to Europe that was previously outsourced. They also allow a more resource efficient production and delivery of goods and services that are tailored to individual needs and expectations (e.g. personalised health-care, tailored personal education). The digital revolution, if well managed, offers the opportunity to strengthen Europe’s economy and society which have suffered from a decade of low growth, a weakening of the social fabric and unsustainable development. It is also an opportunity for the EU to demonstrate global leadership in innovation and technologies. Maximising the positive impacts of this digital revolution on people's lives and European business activity is the principal aim of the Digital Single Market (DSM) strategy adopted on May 2015. As part of its 10 priorities, the Juncker Commission has thus decided to provide a strong focus on digital through the Digital Single Market strategy, combined with fresh investment in new technologies and fostering of capital availability thanks to the building of a Capital Markets Union. In the 18 months following the adoption of the Strategy, the European Commission consulted widely and delivered the necessary proposals under the 16 actions of the Strategy. The proposals will bring down barriers, reduce costs of doing business across borders, improve access to goods and services for all citizens, and create the necessary conditions for investment and growth in digital infrastructure and services and all those sectors that rely on them. The final shape of many of the legislative proposals now rests in the hands of the Council and the European Parliament. Other actions are being implemented through various non-legislative measures. Those range from financing key digital technologies and stimulating digitisation to modernising public services through the digital transformation of government. This Staff Working Document takes stock of the considerable distance that the Commission has covered since May 2015. It also highlights new issues that have emerged more clearly since then: the need to better capture the impact of the digital transformation on societies, the growing role of data, the European cloud, digital skills, artificial intelligence and internet platforms, the potential that digital has for health and health care and the mapping out of cybersecurity risks. This Staff Working Document provides an overview of the implementation of the DSM strategy and shows how the Commission manages the digital transformation and keeps up with digital developments. Chapter 2 highlights the rationale of the DSM legislative proposals (including better enforcement actions) and overviews the progress made since the adoption of the Strategy. Chapter 3 provides an overview of emerging trends in digital ecosystems that may require additional actions. This covers online platforms, the data economy and cybersecurity. Chapter 4 focusses on digital policies aimed at successfully managing the digital transformation of our economy and society. It summarises the Commission's activities in this field: to boost Europeans' digital skills, foster the digitalisation of industry and service sectors, modernise the public sector and step up investments in connectivity and digital technologies. Chapter 5 looks at the EU's position on the global digital stage. 1.2.Reactions to the DSM Strategy The European Council and The European Parliament supported and welcomed the strategy. The European Council stated that the strategy should be used to promote inclusive growth in all EU regions. The European Parliament considered that achieving a digital single market through a horizontal approach, strengthened in its implementation, creates jobs and growth, a more inclusive society, and new opportunities for citizens and businesses. The European Parliament has since commented on several aspects of the strategy and has called on Member States to fully cooperate in implementing the DSM to stimulate growth, create quality jobs, promote necessary innovation in the EU market, keep the European economy globally competitive and bring benefits to both businesses and consumers. The European Council has since committed itself to the adoption and implementation of DSM files by June 2018. In the Bratislava declaration, it repeated the importance of delivering concrete benefits for citizens. The European Economic and Social Committee supported the Commission in its determination to put an end to the fragmentation of European digital policy and pointed to closing the skills gap as a priority. The European Committee of the Regions has been favourable towards the strategy in its opinions, emphasising the importance of deploying digital infrastructure across Europe. National Parliaments also engaged,putting forward opinions on both the strategy and its specific action points. Member States have supported and pushed the strategy forward through different contributions, the adoption of new or amended national strategies, and processes like the digital republic law in France, and the Foundation Autonomous-project in Denmark. Today, National Digital Agendas are in place in all Member States and reflect the strategies put forward by the European Commission. This has led to a higher priority and awareness of digital policies throughout Europe. Some Member States seem to go beyond having one National Digital Strategy by formulating and implementing more specific strategies on the various core issues of the Digital Single Market such as eGovernment, Industry 4.0 and eSkills. The strategy has provided Member States with a common framework and has united Europe in its development of digital policies necessary both in the internal market and the global economy. 2.A call for timely delivery and effective implementation

This section presents the progress on policy files categorised by agreements already reached between co-legislators, legislative proposals under negotiation, enforcement activities related to the DSM and reactions after the adoption of the DSM Strategy by Member States and various European Institutions. 2.1.Agreements already reached 2.1.1.Wholesale Roaming and Fair Use Policy Implementing Act Challenges addressed through the actions announced in the DSM Communication The Commission has been working for a decade to reduce and ultimately remove the surcharges citizens face each time they cross a border while using their mobile device. The Digital Single Market will not happen if people are hesitant to go online, text or call every time they cross a border. 34 % of Europeans travel abroad within the EU every year. Since 2007, roaming prices have decreased by more than 90 %. Prices last fell in April 2016, to 5 cents per minute of voice call received, 2 cents per SMS sent, and 5 cents per MB of data on top of national rates. In 2015, based on a proposal by the European Commission, the European Parliament and the Council agreed to end roaming charges for people travelling periodically in the EU. To this end, it was also necessary to reduce the maximum prices operators can charge each other, when their customers use other networks when roaming in the EU. That is why the European Parliament and the Council mandated the Commission to review the markets where operators purchase roaming services for their customers ('wholesale roaming markets') and make appropriate proposals by 15 June 2016, to enable the abolition of retail roaming charges from 15 June 2017. What has been delivered? Following an in-depth review of the wholesale roaming markets, the Commission adopted its proposal on 15 June 2016. The European Parliament and the Council adopted the new rules in April 2017. All measures will be in place to abolish retail roaming charges from 15 June 2017. On 15 December 2016, the Commission adopted an implementing act with detailed rules on ‘fair use’ measures that operators can take to prevent abuse of the roaming services, and on a derogation that operators can apply for when the provision of regulated roaming services at domestic prices threatens the sustainability of their domestic charging model. National regulators, authorising such derogations, can only grant them exceptionally, on the basis of the methodology included in the implementing act. The European Parliament and the Council adopted the new rules in April 2017. All measures will be in place to abolish retail roaming charges from 15 June 2017. 1 July 2014 30 April 2016 15 June 2017 Outgoing voice calls (per minute) EUR 0.19 Domestic price + up to EUR 0.05 Roam like at home – no extra fee, same as domestic price when travelling in the EU Incoming voice calls (per minute) EUR 0.05 EUR 0.0108 Outgoing texts (per SMS message) EUR 0.06 Domestic price + up to EUR 0.02 Online (data, download, per MB) EUR 0.20 Domestic price + up to EUR 0.05 2.1.2.Spectrum – UHF band (including 700MHz band) Challenges addressed through the actions announced in the DSM Communication Radio spectrum is an essential resource for wireless communications. Smart phones and tablets, for example, depend on wireless connectivity, but it will also become relevant for traditional sectors that will use the next generation of connectivity (5G) to deliver new wireless services, such as connected cars, or new mobile health applications. However, radio spectrum is a finite resource and the devices that use it can easily cross borders. Therefore, logically, Europe needs to ensure sufficient spectrum is available in time to support these new services, and that EU-level coordination is effective and efficient. What has been delivered? The Commission adopted its proposal for a Decision of the European Parliament and of the Council on the use of the 470-790 MHz frequency band in the Union on 2 February 2016. The proposal intended to contribute to the availability of high-speed wireless broadband for all EU citizens by 2020 and facilitate the development of next generation connectivity services through harmonised use of the 700 MHz band. The coordinated release of the 700 MHz band will enhance rural and ubiquitous machine-type wireless connectivity of up to 100 Mb/s and enable leading 5G deployment in Europe by 2020, due to its ability to deliver cost-efficient wireless connectivity with both indoor and outdoor coverage. It can also be combined with other sub-1GHz bands, such as 800 MHz and 900 MHz, to boost capacity and provide wide coverage. At the same time, the lower part of the spectrum band will be reserved for the distribution of audio-visual media services to the public, while allowing technology and service neutrality for flexible spectrum use on a national basis in accordance with broadcasting needs.

On 14 December 2016, the co-legislators reached a general political agreement on the proposal. On 15 March 2017 the finalised proposal was approved by the European Parliament. In conjunction with the proposal, the Commission adopted in April 2016 an Implementing Decision, which harmonises the technical conditions for use of, the 694-790 MHz (700 MHz) frequency band for wireless broadband and facilitates flexible use for specific national needs. 2.1.3.Cross-border portability of digital content Challenges addressed through the actions announced in the DSM Communication There are significant barriers limiting cross-border portability of online content services (e.g. audio-visual services including online transmission of sporting events) in the EU. The reasons behind these barriers are related to the licensing practices of right holders and the commercial practices of service providers. These aspects had to be addressed to ensure that Europeans travelling in any EU Member State are able to access the online content services (films, sporting broadcasts, music, e-books or games) to which they have subscribed in their home country. What has been delivered? In December 2015, the Commission proposed a new Regulation ensuring the cross-border portability of online content services to which a consumer subscribed in their Member State of residence. That means consumers can continue using online content services such as watching films or sporting events, listening to music, reading e-books or playing games when temporarily traveling in other Member States, e.g. on holidays or business. Based on a 2015 estimate, over 29 million people would have used this feature then and as many as 72 million would do so in 2020. The European Parliament and the Council reached a political agreement on the proposed Regulation on 7 February 2017. The Regulation will become applicable in the beginning of 2018 following its formal imminent adoption and a 9-month period provided to prepare for the application of the new rules. 2.2.Proposals adopted by the Commission, awaiting co-legislature 2.2.1.Geo-blocking Challenges addressed through the actions announced in the DSM Communication Geo-blocking refers to practices used by traders that result in discrimination against customers on the basis of their nationality, place of residence or of establishment. This can entail denial of access to websites from other Member States, or to situations, where the customer from another Member State is discriminated against or prevented from accessing the product or service or can only pay with a debit or credit card from a certain country. Sometimes such restrictions can be justified, for instance where the seller needs to comply with specific legal obligations. But in many cases they cannot. Despite the implementation of the non-discrimination principle in the Services Directive, there is uncertainty over what constitutes objective criteria that justify differences in the way traders treat customers. By limiting consumer opportunities and choice, geo-blocking is a significant cause of consumer dissatisfaction and of fragmentation of the Internal Market. A Commission mystery shopping survey found that in only 37 % of all websites assessed were shoppers successful in reaching the last stage of the online shopping process, where they successfully entered their payment details in order to complete their cross-border purchase. Removing geo-blocking barriers could lead to an aggregated consumer gain of EUR 500 million and an aggregated firms' profit increase of EUR 283 million from new trade opportunities. What has been delivered? In May 2016 the Commission adopted its proposal for a regulation on addressing geo-blocking and other forms of discrimination based on customers' nationality, place of residence or place of establishment. The proposal defines specific situations when there can be no justified reasons for geo-blocking or other discriminations based on nationality, residence or location. Furthermore, the proposal bans blocking of access to websites and the use of automatic re-routing if the customer has not given prior consent. The proposal also provides for a non-discrimination rule in payments. 2.2.2.Digital Contracts (online content & distance sales of goods) Challenges addressed through actions announced in the DSM Communication Despite the rapid growth of e-commerce, most European businesses do not yet make the most of the DSM. European consumers also miss out on a potentially broader choice of products and better prices. Legal gaps and differences between the relevant contracts laws of the Member States are among the obstacles still preventing this. For defective digital content there are no rules at EU level offering remedies. Some Member States have started designing their own laws in this area. For online sales of goods, the EU still works with 28 partially different consumer contract laws. This situation causes legal uncertainty and results in a fragmented environment for businesses and less competitive offers for consumers. What has been delivered?

(i) Proposal for a Directive on certain aspects of contracts for the supply of digital content The proposal for a Directive advocates for full harmonisation of key contract rules for the supply of digital content. It covers business-to-consumer transactions. (ii) Proposal for a Directive on certain aspects of contracts for the online and other distance sales of goods The proposal for a Directive advocates for full harmonisation of key contract rules for the online and other distance sales of goods. This proposal too, covers business-to-consumer transactions. 2.2.3.Value Added Tax (VAT) for eCommerce Challenges addressed through the actions announced in the DSM Communication Companies, especially smaller ones, find it difficult and costly to comply with many different national systems for value-added tax (VAT). The current rules impose a high cost of doing business cross-border (companies that sell goods online pay around EUR 8 000 in VAT compliance costs for every EU country into which they sell); they do not provide a level playing field. Companies based outside the EU can fraudulently mark expensive goods such as mobile phones and tablets as costing less than EUR 22, meaning that no VAT is paid. This puts European businesses at a clear disadvantage vis-à-vis non-European ones and leads to revenue losses for Member States. It is estimated that EUR 5 billion of VAT is lost each year in the EU due to non-compliance on cross-border online sales. What has been delivered? The Commission adopted a package of three proposals on 1 December 2016. This included: 1)new rules allowing companies that sell goods online to take care of all their VAT obligations in the EU through a digital online portal, hosted by their own tax administration and in their own language; 2)support to startups and micro-businesses, via the introduction of a yearly VAT threshold of EUR 10,000 under which cross-border sales for online companies are treated as domestic sales, with VAT paid to their own tax administration 3)the removal of the current exemption from VAT for imports of small consignments from outside the EU, which leads to unfair competition and distortion for EU companies; 4)a change to existing VAT rules to enable Member States to apply the same VAT rate to e-publications like e-books and online newspapers, as they apply to their printed equivalents. The new rules will have a major effect for companies selling goods and services online that will now be able to benefit from fairer rules, lower compliance costs and reduced administrative burdens. Member States and citizens will benefit from additional VAT revenues of EUR 7 billion annually and a more competitive EU market. 2.2.4.Copyright Challenges addressed through the actions announced in the DSM Communication Users often face barriers when accessing copyright-protected content across borders due to legal and/or contractual restrictions applied by the right holders and/or the service providers. Additionally, the clearance of rights is particularly difficult in some cross-border situations, e.g. in the case of certain online transmissions of broadcasters or the digitisation and dissemination of out-of-commerce works by cultural heritage institutions. Copyright exceptions currently allow for specific purposes and under specific conditions, the use of protected works without the authorisation of right holders - but most of the exceptions in EU law are optional, do not have cross-border effect or do not always cover digital uses. This inhibits new ways of using digital materials for education, research, preservation of cultural heritage and access to knowledge. Copyright-intensive industries account directly for 3.2 % of employment in the EU with around 7.05 million jobs (average between 2008-2010). Overall, 4.2 % of the EU’s GDP is generated in copyright-intensive sectors. Copyright-intensive industries account for 4.2 % of EU’s exports, with net exports of around EUR 15 billion in 2010. In recent years, the internet has become the main marketplace for accessing and disseminating copyright-protected content but authors and other right holders face difficulties getting a fair share of the value generated by some forms of online content distribution.

What has been delivered? In September 2016, following the first legislative initiative on cross-border portability of online content services (see 2.1.3), the Commission proposed a further package of legislative measures. 1)To ensure wider online access to content in the EU, the Commission proposed rules to make it simpler and faster to clear the copyright and related rights that are needed for certain broadcaster' online services (such as simulcasting and catch-up TV/radio), and for re-transmission services via means such as IPTV. As a result, users will have access to a wider variety of broadcasters' TV and radio programmes from other Member States. Also, the Commission proposed to enhance the availability of audio-visual content on video on demand platforms through the introduction of a negotiation mechanism facilitating the conclusion of licences for audio-visual works. Finally, works that are out-of-commerce but hold great cultural value will become more easily available through the solutions that have been proposed to facilitate licensing of rights by cultural heritage institutions. 2)To adapt certain exceptions to the digital and cross-border environment, the Commission proposed new mandatory exceptions in the areas of education, text and data-mining, and preservation of cultural heritage. 3)To foster a well-functioning copyright marketplace, the Commission proposed that press publishers will be provided with a new related right for the exploitation of their publications in the digital environment. Other measures strengthen the position of right holders to negotiate the exploitation of their copyright protected content by online services storing and giving access to a large amount of content uploaded by their users. Right holders should be in a better position to decide on the use and possible remuneration for the use of their content by such online services. Finally, authors and performers will benefit from increased transparency with their contractual partners on the exploitation of their works and performances, which should help them to receive appropriate remuneration when the contractually agreed remuneration is disproportionately low compared to the success of their work (best-seller clause). The Commission is committed to ensuring the coherence and efficiency of results in view of the sector specific discussions that are required for implementation. In parallel, two legislative proposals were adopted for the implementation in EU law of the Marrakesh Treaty which requires the contracting parties to introduce exceptions for the benefit of people with visual disabilities to access books and other print material in formats that are accessible to them as well as to ensure the cross-border exchange of such formats. As a result, blind and other print-disabled persons will have better access to special format copies of books from the EU and from other parts of the world. 2.2.5.Parcel delivery Challenges addressed through the actions announced in the DSM Communication Consumers and small businesses complain that problems with parcel delivery, particularly high delivery charges for cross-border services, prevent them from selling and buying more across the EU. Prices charged by postal universal service providers to deliver a small parcel to another Member State are on average three to five times higher than domestic prices, without a clear correlation to the actual costs. What has been delivered? The Commission adopted its proposal for a Regulation on cross-border parcels delivery on 25 May 2016, as part of the DSM e-commerce package, together with the proposal addressing unjustified geo-blocking and the revision of the Consumer Protection Cooperation Regulation. This is a package of complementary measures that will allow consumers and companies to buy and sell products and services online more easily and confidently across the EU. The proposed Regulation on cross-border parcel delivery complements existing non-legislative initiatives, including greater interoperability between postal operators, trust marks and new standards in the parcel sector. It should: 1)make regulatory oversight more effective because all parcel delivery service providers will have to provide regulators with basic information about their services; 2)require the prices of universal service providers to be assessed for affordability and name those who are not fulfilling their obligation to provide affordable cross-border delivery services for consumers and small businesses; 3)give customers more choice of cross-border parcel services by requiring universal service providers to offer access to their cross-border networks in order to encourage new market entrants. 2.2.6.Consumer rights enforcement / Unfair Commercial Practices Directive Challenges addressed through actions announced in the DSM Communication The Digital Single Market Strategy identified a problem with the enforcement of consumer rights in the digital environment. EU-wide enforcement cooperation among public authorities is often slow or ineffective. It needs to be strengthened to prevent non-compliant traders from exploiting gaps and territorial and other limitations in Member States' enforcement capacity. A key piece of legislation to boost fairness in e-commerce transactions is the Unfair Commercial Practices Directive (UCPD). But EU consumers often do not know their rights, and businesses, especially new digital and collaborative business models, may not comply as they are unsure which rules apply to them. What has been delivered?

Consumer Protection Cooperation (CPC) Regulation In May 2016, the Commission proposed a reform of the Consumer Protection Cooperation (CPC) Regulation that would: 1)ensure a strengthened and more efficient enforcement cooperation framework that will increase legal certainty, particularly for traders and consumers active across borders; 2)enable authorities, by means of additional powers, to (jointly) act faster to stop widespread online infringements (e.g. interim measures to block infringing websites); 3)provide a single procedure, launched and coordinated by the Commission, for EU-wide problems.

The EU-wide online dispute resolution platform In the beginning of 2016, the Commission opened its online dispute resolution platform to alternative dispute resolution (ADR) bodies and consumers. It helps consumers and traders to solve online disputes over a purchase made online (both domestic and cross-border), without going to court. In its first year of operation, the platform attracted more than 24,000 consumer complaints. More than one third of the complaints concerned cross-border purchases within the EU. Updated Guidance on the application of the Unfair Commercial Practices Directive In May 2016, as part of the e-commerce package the Commission adopted a staff working document with updated guidance on the application of the Unfair Commercial Practices Directive. It contains a specific part explaining its application to the online sector, such as online platforms, search engines, comparison tools and the collaborative economy. 2.2.7.Audio-visual Media Services Challenges addressed through actions announced in the DSM Communication Viewers, particularly minors, are moving from traditional TV to the online world. While TV broadcasting services are strictly regulated, on-demand services (Netflix, MUBI) are subject to a lighter regulatory regime and video-sharing platforms (YouTube, Dailymotion) are generally outside the rules' scope altogether. These discrepancies are especially found in the area of: 1)advertising rules, which allow TV broadcasters little flexibility, in an environment where consumers can easily switch to online ad-free offerings; 2)the promotion of European works. Whereas European TV broadcasters invest around 20 % of revenues in original content, on-demand providers invest less than 1 %; 3)consumer protection provisions (especially for minors). Rules protecting minors from harmful content (pornography, violence) and protecting all citizens from incitement to hatred do not cover video-sharing platforms. What has been delivered? The Commission proposed a revision of the Audiovisual Media Services Directive (AVMSD) in May 2016. The proposal introduces flexibility when restrictions applicable to TV are no longer justified, whilst ensuring consumers will be protected in the on-demand and internet world. The proposal strengthens requirements on the promotion of European works for on-demand services (20 % quota of European Works in their catalogues, good visibility of such works in their offers). In some Member States this would result in an increase in consumer choice by up to 450 EU films. If the proposed Directive is adopted, video-sharing platforms will have to take measures to protect minors from harmful content and to protect all citizens from incitement to hatred, based on new EU-specific terms. This would be done while respecting the lack of editorial control over the content they host and building on existing efforts by the industry. On the other hand, it is proposed to provide more flexibility to TV broadcasters on advertising rules, product placement and sponsoring. Having simplified rules on product placement and sponsorship could generate additional revenue of respectively EUR 1.2 billion and EUR 441 million for broadcasters and on-demand services in the EU. An increase in advertising revenues would increase their capacity to invest in audio-visual content, which will benefit both the competitiveness of the EU audiovisual industry and consumers.

Additionally, the proposal seeks to simplify the rules on jurisdiction and clarify cooperation procedures that govern limitations to the country of origin principle. The proposal provides that Audio-visual Regulators have to be independent, and gives the European Regulators Group for Audio-visual Media Services a bigger role in preserving the internal market (assessing EU co-regulatory codes, derogations to country of origin principle). 2.2.8.European Electronic Communications Code, BEREC & WiFi4EU Challenges addressed through the actions announced in the DSM Communication The electronic communications sector is undergoing structural change and suffers from isolated national markets, a lack of regulatory consistency and predictability across the EU (particularly for radio spectrum), and a lack of sufficient investment, notably in rural areas. Rural areas suffer from an undersupply of fast broadband: in 2016, despite substantial improvement only 40 % of rural areas were covered by the Next Generation Access (NGA) networks, compared to 76 % EU wide. The regulatory framework has successfully promoted and fostered retail competition in the telecom sector, but not enough 'infrastructure' competition has emerged in fixed-line networks, except in very densely populated areas, where cable networks were already present, or where local authorities have been active. Therefore the regulatory framework for electronic communications needs to encourage the deployment of very high capacity networks while maintaining effective competition and adequate returns relative to risks. The changing market and technological environment calls for strengthening the institutional framework. Enhancing the role of bodies in which the Member States' authorities are themselves represented – such as the Body of European Regulators for Electronic Communications (BEREC) or the Radio Spectrum Policy Group – is also required. Telecoms operators compete with services that are increasingly used by end-users as substitutes for traditional electronic communications services such as voice telephony, but are not subject to the same regulatory regime. What has been delivered? As part of its Connectivity Package, in September 2016 the Commission adopted a proposal for a Directive establishing the European Electronic Communications Code (Recast) and a proposal for a Regulation establishing the Body of European Regulators for Electronic Communications, as well as the proposed WiFi4EU initiative. The proposed Code aims to modernise and simplify the telecoms regulatory framework so as to reflect technological and market developments (in particular the growth of internet-based services) and to incentivise investments in very high capacity networks. Results in the Digital Economy and Society Index show a clear correlation in Member States between performance in terms of connectivity and overall digital performance. The proposed BEREC Regulation aims to enhance the powers and functions of BEREC in order to contribute to a more consistent application of the telecom rules throughout the EU. The proposal also aligns BEREC's structure, governance, operation, programming and accountability with the 'common approach' on decentralised agencies of July 2012. The Commission is conducting an evaluation study to assess the impact of the Broadband Cost Reduction Directive on the cost of EU-funded broadband projects, by July 2018. Accompanying measures to support internet connectivity The Commission, in addition to proposing regulatory incentives for private investment, is working on making the use of public funding smarter and more efficient. The WiFi4EU initiative aims to make financial incentives available to public entities who want to provide free, high capacity local wireless connectivity in public spaces within their jurisdiction or at their sites of service. Moreover, in December 2016 the Commission and the European Investment Bank announced the launch of a fund for broadband infrastructure – the Connecting Europe Broadband Fund - open to participation of National Promotional Banks and Institutions and private investors, which is capitalising on a EUR 100 million Connecting Europe Facility contribution. On the basis of EUR 500 million from public and private sources, it is expected to trigger additional investments in broadband deployment in less densely populated areas amounting to between EUR 1 billion and EUR 1.7 billion between 2017 and 2021. Additional support is provided by the European Fund for Strategic investment, the Connecting Europe Facility and EIB lending activity. About EUR 1 billion has been approved under the European Fund for Strategic Investments (EFSI) triggering around EUR 3.2 billion of total EFSI related investments for broadband-related projects by April 2017. Additionally, under the current financial framework, around EUR 6 billion of European Structural and Investment Funds (ESIF) and European Agricultural Fund for Rural Development (EAFRD) funds are supporting broadband roll out in under-served areas, including the infrastructure needed for the adoption of digital services for a smart rural economy.. An element to ensure complementarity between funds is the network of Broadband Competence Offices supported by a Brussels-based support facility, which among other activities helps local project managers to find the most appropriate funding sources available for their type of broadband infrastructure projects. The official launch of this Broadband Competence network is planned for November 2017. In addition, the European Investment Advisory Hub provides a single access point to advisory and technical assistance services on investment. Meeting Europe's internet connectivity objectives will also require pro-active national or regional policies. The Commission has called on Member States to review progress in their National Broadband Plans (NBPs) and update them by the end of 2017 for a time horizon of 2025. The Commission has reported on the development of National Broadband Plans in its Digital Progress Reports. In addition, an independent study on Member States' NBPs, financed by the Commission, provided a comparative assessment of these plans. A "Connectivity/5G Working Group" is being set up to address the revision of NBPs and ensure the inclusion of the 5G roadmaps – actions that Member States are expected to complete by the end of 2017. This work will inform the development of voluntary 'guidelines' on the aspects to be covered by the update of NBPs with a time horizon of 2025 and ensure alignment with the new strategic objectives. It should also help identify Member States' best practice on administrative conditions and time frames to facilitate comprehensive coverage. The Commission and the Committee of the Regions have announced the setting-up of a joint Participatory Broadband Platform involving local and regional decision-makers in the discussion of connectivity policies. The Commission’s State Aid broadband guidelines furthermore inform Member States on how their intended subsidies can be channelled in a pro-competitive manner. As announced in the DSM Communication, in the assessment of compatibility with the State Aid Framework of public support to future broadband projects, the Commission will take into account the foreseeable evolution of long-term demand when applying the "step change" approach of the Broadband State Aid Guidelines in conjunction with the strategic objectives set in the Communication. The Commission will also consider efficient blended financing that contributes to lower the aid intensity and to reduce risks of distorting competition, as part of its assessment of State aid interventions.

2.2.9.ePrivacy Challenges addressed through the actions announced in the DSM Communication The General Data Protection Regulation (GDPR) will protect individuals in respect of processing of personal data. Special rules on data protection apply in the electronic communications sector (ePrivacy Directive). The efficacy of the ePrivacy rules protecting the confidentiality of communications has been eroded over time by technological changes. Services that are functionally equivalent to electronic communications services (ECS), such as the over-the top (OTT) services (e.g. Skype, WhatsApp or Viber) are not subject to most of the current ePrivacy Directive provisions. In respect of the confidentiality of terminal equipment, which applies e.g. to cookies, the consent requirement has a number of problems: users do not read long and complex privacy statements and find it difficult to understand what consent implies. Moreover, the rule is not well adapted to more recent technology: it also applies to non-intrusive practices but it does not address new tracking techniques (e.g. device fingerprinting). Diverging implementation, interpretations and inconsistent enforcement of several key provisions also create problems. This is linked to the current system of enforcement, where Member States are free to choose which authorities are competent. What has been delivered? In 2016 the Commission undertook a REFIT evaluation of the ePrivacy Directive which assessed the functioning of the applicable legal framework and the objectives of the Directive. The Commission adopted its proposal for an ePrivacy Regulation in January 2017 which complements and particularises the GDPR regarding the protection of personal data and implements in secondary Union law the right to the respect of private life, with regard to communications (Article 7 of the EU Charter of Fundamental Rights), in addition to the right to the protection of personal data (Article 8 of the Charter). As to its main content: 1)It protects the confidentiality of electronic communications (content and related traffic and location data – metadata) via publicly available electronic communications services. Electronic communications service providers can normally only process electronic communications data based on the users' consent. Without consent the processing can only take place for specific purposes, such as the technical storage for transmission, billing or ensuring the quality of the service. The new ePrivacy proposal is technology-neutral. It will apply to both traditional telecoms operators (ECS) and the “over-the-top” service providers as long as they provide electronic communications services. 2)As regards online tracking, to minimise the number of cookie banners on websites, the users will be required to choose a specific privacy setting when they install their browser. They will also be able to modify their privacy setting easily and at any point in time. 3)92 % of survey respondents say it is important that personal information on their computer or smartphone can only be accessed with their permission and that the confidentiality of their e-mails and instant messaging is guaranteed. 4)The proposal also contains rules on calling line identification, incoming call blocking, unsolicited marketing communications (spam). 5)The enforcement of the ePrivacy Regulation, including the choice of national competent authorities, is brought in line with the GDPR. 2.2.10.Enforcement of intellectual property rights Challenges addressed through the actions announced in the DSM Communication Respect for intellectual property rights is essential to promote creativity and innovation and create trust in the market place. Rights that cannot be effectively enforced have little economic value, particularly when infringements occur on a commercial scale that free-rides on the work and investment of creators, the industry and legal distribution services. Such commercial-scale infringements are currently very frequent and harmful, not only to right holders but also to the EU economy as a whole. An effective and balanced civil enforcement system, which takes full account of fundamental rights, is required to reduce the costs of fighting infringements, particularly for small businesses, and keep up with their increasing cross-border nature. The Commission is exploring whether the current legal framework, in particular the Directive on the enforcement of intellectual property rights (IPRED),is fully fit for the challenges of the Digital Single Market. This is being assessed, in particular through a REFIT evaluation that the Commission began in 2016. What has been delivered? Voluntary cooperation agreements between right holders and intermediary service providers can include a set of principles and rules aimed at identifying and disrupting the revenue stream for commercial scale infringements of intellectual property rights. The first Memorandum of Understanding brokered by the Commission in 2011 on the sale of counterfeit goods via the internet was reviewed in June 2016 to include Key Performance Indicators that will allow for the impact of the Memorandum of Understanding to be objectively quantified. A new agreement between the advertising industry, right holders and advertisers is expected to be signed by the summer of 2017.

The preliminary findings of the above-mentioned REFIT evaluation lead to the conclusion that the existing rules have helped effectively in protecting intellectual property rights (IPR) and preventing infringements by creating a broadly common legal European framework. However, the evaluation has also shown that there are differences in the way some measures, procedures and remedies of the IPRED are applied across the Member States. For example, Member States offer different levels of protection to right holders when awarding damages for IPR infringements. The data currently available show a great variation in terms of damages requested as well as awarded. Between 2010 and 2015 the average award for design right infringements for example was as high as EUR 600,000 in Italy or EUR 500,000 in Spain, while German courts awarded on average EUR 300,000 for design cases. In the UK and France, average awards were about EUR 100,000. For patents-related litigation, the average amount of damages awarded was EUR 1.3 million in Spain, whereas German courts awarded on average EUR 600,000, Italian and the UK courts around EUR 400,000, and in France EUR 200,000. The REFIT evaluation findings point at some other problems as well: for example, the use and presentation of digital evidence and the access to digital information is not explicitly regulated by IPRED which may reduce its effectiveness in combating infringements on the internet. Moreover, while intermediaries can play an important role in the protection of IPR there are differences in the EU as regards the use of the right of information and of interlocutory and permanent injunctions. For example, under the IPRED, permanent injunctions, which can permanently prohibit the continuation of an infringement, must be available also against intermediaries whose services are used by third parties to infringe IP rights. Yet the REFIT evaluation shows that significant disparities remain in the EU in the scope and criteria under which such injunctions are available against intermediaries. 2.2.11.E-commerce sector inquiry Challenges addressed through the actions announced in the DSM Communication The Commission launched an antitrust competition inquiry into the e-commerce sector in the EU. The inquiry particularly focused on potential barriers erected by companies to cross-border online trade in categories of consumer goods where e-commerce is most widespread such as electronics, clothing and shoes, as well as in the provision of digital content, in particular the online provision of audio-visual and music products. The objective of the sector inquiry was to understand the prevalence of certain business practices and their underlying rationale, to allow the Commission to identify possible competition concerns in European e-commerce markets and to identify priorities for the enforcement of EU competition rules. During the inquiry, the Commission has gathered evidence from nearly 1 800 companies operating in e-commerce of consumer goods and digital content and has analysed more than 8 000 distribution contracts. What has been delivered? In March 2016, the Commission published initial findings on geo-blocking in an issues paper. In September 2016, the Commission published a Preliminary Report on the e-commerce sector inquiry setting out its initial findings. The publication of the Preliminary Report was followed by a public consultation open to all interested stakeholders. The public consultation ended on 18 November 2016. Altogether 66 submissions were made in relation to consumer goods and digital content. The Commission published the Final Report on the E-commerce Sector Inquiry. The Report confirms that e-commerce is an important driver of price transparency and price competition, increasing consumers' choice and their ability to find the best deals. This transparency also impacts the supply side: the report finds that manufacturers have responded to the growth of e-commerce by adopting a number of practices to better control the distribution of their products and the positioning of their brands. (i) To reap the benefits of online sales and better control distribution, manufacturers increasingly sell their products online directly to consumers. Selective distribution systems are also used more widely, allowing the manufacturers to set the criteria that online and offline retailers must meet to become part of the distribution network. The report also points to an increased recourse to restrictive business practices that may limit online competition. Depending on the business model and strategy, restraints may take various forms, such as resale price restrictions, contractual restrictions on selling on online marketplaces (platform bans) or on submitting offers to price comparison websites (price comparison tool bans), the exclusion of pure online players from distribution networks, as well as contractual restrictions on cross-border sales, which are often implemented by means of geo-blocking. The results of the sector inquiry show that the majority of geo-blocking measures in relation to consumer goods result from unilateral business decisions of retailers not to sell cross-border. These contractual sales restrictions may, under certain circumstances, make cross-border shopping or online shopping more difficult and ultimately harm consumers by preventing them from benefiting from greater choice and lower prices. (ii) Digital content: The Report finds that the way copyright licensing agreements are structured has a major impact on competition. The license agreements determine what territories, technologies and release windows digital content providers can use. The Report found that more than 60 % of the licence agreements submitted by rights holders are limited to the territory of a single Member State. Almost 60 % of responding digital content providers have contractually agreed with right holders to geo-block. There are however stark differences as regards Member States and content sectors when it comes to the prevalence of geo-blocking. The results of the e-commerce sector inquiry raise the question of whether certain licensing practices may make it more difficult for new online business models and services to emerge and for new or smaller players to enter existing markets or to grow and expand their activities into other markets or whether these licensing practices are justified. In the light of the findings of the sector inquiry the Commission has already opened three investigations into alleged anti-competitive practices for consumer electronics, video games and hotel accommodation. 3.Ensuring a fair, open and secure digital environment The DSM Strategy provided a comprehensive analysis and action plan to achieve a connected Digital Single Market. Its pillars focused on better online access for consumers and businesses across Europe, creating the right conditions and a level playing field for advances digital networks and innovative services as well as maximising the growth potential of the digital economy. While working on the implementation, over the last 2 years the digital society and economy has been evolving. Section 3 addresses the digital developments, such as the regulatory environment for online platforms, innovative solutions with the help of data and tackling cybersecurity challenges in the future.

3.1.Promoting Online Platforms as responsible players of a fair internet ecosystem Policy Context Online platforms play a central role in social and economic life; they revolutionised the digital economy and access to information and content in an increasingly cross-border context. A comprehensive analysis of the role of online platforms in the market, including in the fight against illegal content on the internet, is a key component of the DSM Strategy. Some important findings include: 1)At the end of 2015, the largest 178 online platform enterprises alone accounted for 25 % of global web-based internet traffic - excluding app-based traffic. 2)39 % of all European businesses used online social media in 2015, with social networks being the dominant outlet. At the same time, six in ten EU internet users that responded to a recent Eurobarometer survey declared using online social media at least once a week. 3)82 % of SME respondents to a recent Eurobarometer on online platforms rely on search engines to sell products and/or services online, with 66 % indicating that their position in the search results has a significant impact on their sales. 4)42 % of those SME respondents use online market places to sell their products and services, with 52 % stating that their company’s reviews on online platforms have a significant impact on their sales. 5)90 % of respondents to the Commission's Business-to-Business (B2B) business panel survey use online social media platforms for business purposes, with 72 % of respondents using one and the same firm. 6)56 % of respondents to the Commission's B2B business panel survey considered the platforms they use to reach customers as 'important' or 'very important' to their business. 7)A 2014 study showed a majority of EU software application developers complaining of their de facto total dependence on online platforms, with subsequent revenue impact. 8)Several international organisations, such as the Council of Europe , United Nations and the Organization for Security and Co-operation in Europe (OSCE) , call for greater transparency and due process around the removal of illegal or harmful content online. 9)Following a recent study covering the terms of service of 50 well-known online platforms, almost 50 % of the platforms analysed contain clauses stating that some kind of monitoring is conducted without specifying what type of content may be affected, or doing so ambiguously. In addition, while most platforms (70 %) provide clear and transparent information on how users report content they deem inappropriate (not illegal), the counter-notice mechanisms are seen as suffering from lack of due process. Finally, the majority of platforms (52 %) explicitly state that they may remove content based on third-party notification without offering any justification, notification or opportunity to be heard to the user who originally shared it. What has been delivered? In its Communication on Online Platforms and the Digital Single Market Opportunities and Challenges for Europe of 25 May 2016 the Commission outlined the key issues identified in the assessment of online platforms and set out its position on the innovation opportunities and regulatory challenges presented by online platforms. It also announced a targeted fact-finding exercise on Business-to-Business (B2B) practices based on preliminary evidence available, inter alia through the public consultation that informed the 2016 Communication. At the same time, the Commission also committed to explore the need for guidance on the liability of online platforms and review the need for formal notice-and-action procedures in light of the results of other relevant work streams, as explained below. In addition, the Commission committed to further promoting interoperability actions through issuing principles and guidance on electronic identification (eID) interoperability at the latest by 2017. The competition sector inquiry into e-commerce (described in section 2.2.11) and the updated UCPD Guidance (as explained in section 2.2.6.) are also relevant to online platforms, including their responsibilities stemming from the professional diligence duty and transparency obligations. As regards the responsibility of platforms, several on-going work streams aim to address the issue of illegal or harmful online content and their transparency requirements. While these initiatives do not alter the liability exemptions applicable to online intermediaries in accordance with the E-commerce Directive, they impose certain obligations on them in specific problem areas. The legislative proposals on copyright and the revision of the Audio-visual Media Services Directive, the proposed Terrorism Directive and the ongoing review of the Directive on the enforcement of intellectual property rights (IPRED) are the most relevant examples in this respect. In respect of non-legislative initiatives, the work of the EU Internet Forum as well as the code of conduct on countering illegal hate speech online should be mentioned. In line with the Communication, the implementation of these voluntary measures is currently being monitored to assess the effectiveness of self-regulation to tackle illegal content. In 2015, the Commission awarded funding for actions to support transnational projects to combat sexual harassment and sexual violence against women, including in the online sphere. The Alliance to Better Protect Minors is a self-regulatory initiative bringing together leading ICT and media companies, civil society and UNICEF to provide fast and flexible solutions for protecting minors online in a highly dynamic technological landscape.

The Memorandum of Understanding on the sale of counterfeit goods via the internet was reviewed in June 2016 to include Key Performance Indicators that will allow its impact to be objectively quantified. Therein, the need to position the EU competitively in the global platform economy was identified as a long-term strategic policy objective. This requires a continued analysis of policy options to improve the online platform e-commerce ecosystem on a global level. New developments and challenges Ensuring a fair and innovation-friendly platform economy a) Fact-finding exercise The on-going horizontal fact-finding exercise on potentially unfair B2B practices in the online platform environment notably includes: (i) a survey completed by 3 549 businesses users of online platforms, complemented by 50 in-depth interviews and several in-depth case studies; (ii) a number of workshops with business users of online platforms on the respective topics of data, legal terms and conditions and transparency, as well as the use of algorithms; (iii) several external studies (including legal studies on online platforms' terms and conditions), as well as; (iv) internal research on the economic aspects of online platforms and their B2B practices. The Commission also organised a stakeholder workshop bringing together online platforms and business associations representing them, which addressed the practices reported during the B2B fact-finding exercise. The survey of business users shows that many professional users (46 %) experience problems or disagreements with online platforms in the course of their business relationship. Among the business users with more than half of their turnover generated via online platforms (heavy users), the share of those that experienced problems is significantly higher (75 %). Out of all business users who have experienced problems, 21 % indicated that they occurred often over the course of the business relationship. As regards heavy users of online platforms, again a significantly higher share (32 %) experienced problems often. A significant proportion of these problems remains unresolved, as follows. Whereas 11 % of respondents that experienced problems did not even undertake any action to resolve these, an additional 32 % of those respondents that did attempt to resolve them failed to do so. A total of 258 businesses (i.e. 7 % of all respondents and 16 % of those who experienced issues) indicated that they reduced or terminated their relationship with the platform as a result of the problems experienced. The effects of reductions and terminations vary, but an important percentage of firms that terminated their relationship with the platform generated more than 50 % of their turnover through that channel. 20 % of business user respondents in addition disagreed that online platform' contractual terms and conditions and related practices are fair. The reasons stated for this perceived unfairness overlap to a significant extent with the types of problems and disagreements encountered. They include a lack of transparency on platforms' practices concerning data and content; sudden changes in contractual terms or prices which business users are unable to negotiate and de-listing; biased or non-transparent search practices; limitations on access, use and portability of data; limited access to dispute resolution and unfair pricing. A series of interviews conducted with heavy users of platforms provided deeper insight into the possible effects of these practices for the businesses in question. Some were reported to have an immediate effect on operating conditions, including alleged unequal pricing, alleged unfair competition by platforms (vertical integration), suspension of accounts without giving enough information to react and overall insufficient redress mechanisms. The discussions during the Commission workshops with business users of platforms also covered these issues. During the workshop dedicated to platforms' legal terms and conditions, the inability for business users to negotiate terms was agreed upon as the most common issue, together with online platforms' practice of unilaterally changing them, often without notice. Account suspensions and delisting of products were singled out as well. Overall, the terms and conditions of online platforms were characterised as being generally complex and vague, therefore leaving significant scope for interpretation to the platforms' advantage when elaborating the practices that actually regulate businesses' experience with the platform. Another general conclusion highlighted the lack of an effective, accessible and quick independent redress mechanism. On data, a number of workshop participants reported that online platforms in some cases restrict access to customer contact details, or impose limitations on the re-use of certain data. In advertising, businesses reported difficulties in accessing ad performance data and data on their sales statistics, which would lead to difficulties for them in assessing the effectiveness of their advertising campaigns, or adjusting their campaigns where and if necessary. These findings on the sharing of data in platform-to-business relations seem consistent with the results of a previous Eurobarometer study on the use of online marketplaces and search engines by SMEs. Almost two thirds of the 4 900 surveyed companies replied that the information about customers received through online marketplaces (commercial data) is useful to develop or improve their products or services. However, 42 % said that they usually do not get the data they need about their customers from online marketplaces. 47 % stated that it is not easy to transfer key commercial data about their customers from one online marketplace to another. Participants to the workshop on algorithms, search and ranking described a common set of issues as well as certain more sectorial problems depending on the type of platforms (e-commerce for goods, online travel agencies online advertising, app stores and social media). Among the common findings, an issue of general concern was the lack of transparency or verifiability around the way in which platforms actually use algorithms. Examples were mentioned of platforms possibly de-ranking or otherwise penalising businesses for matters unrelated to their performance in the criteria usually incorporated in the algorithms. Online platforms that participated in the final Commission workshop agreed that some growing pains exist in some of the areas highlighted by their business users, but specified that the concerned practices would either be insignificant compared to the numbers of businesses active on platforms (regarding suspensions or delisting), or due to practical reasons (non-negotiability and unilateral changes of terms and conditions). Participating platforms rejected allegations of a lack of transparency in search and ranking, or discrimination issues between own and third party products/services. Regarding data, participants highlighted the constraints imposed on them by existing data protection regulations. Similarly, existing notice and takedown obligations were perceived as a significant challenge, leading platforms to act first and examine the claims later. In conclusion, the fact-finding performed to date shows that businesses, in particular SMEs, encounter a variety of perceived unfair trading practices when dealing with online platforms. These notably include the delisting of products or suspension of accounts – often done in an arbitrary manner, without any prior information. Other issues revolve around terms and conditions (e.g. frequent unilateral and unannounced changes, or a lack of clarity), limited access to and use of data (including portability), and biased ranking and search results, all of which result from the significant imbalance in bargaining power existing between platforms and their business users. In addition, there is concern that some platforms may favour own products or services (including their exclusive use of superior data access to outperform third-party business users), or that they discriminate between different third-party suppliers and sellers, e.g. on their search facilities. Finally, a horizontal issue underlying all of the aforementioned perceived unfair trading practices is the reported general lack of accessible redress that would allow business users to tackle these issues effectively and quickly when they arise. b) Other relevant Commission initiatives touching on Platforms' Business-to-Business (B2B) and Business-to-Consumer (B2C) relationships The Directive on Misleading and Comparative Advertising (MCAD) is currently subject to the Fitness Check of consumer and marketing law and further action on fairness in online platforms' B2B relations will be informed, inter alia, by the findings of this exercise. Also, the need for pre-contractual transparency requirements for online platforms in their relations with consumers may be considered in the report on the Consumer Rights Directive and in the wider Fitness Check exercise in relation to the overall functioning of consumer and marketing law, as long as this is not already covered by the UCPD Guidance (as explained in point 2.2.6 above). The ongoing REFIT Fitness Check of EU consumer and marketing law and the evaluation of the Consumer Rights Directive also assess whether rules need to be adjusted to inform consumers with whom they conclude a contract facilitated via online platforms and based on which criteria the online platforms present commercial offers. Helping online platforms tackle illegal content The vast majority of the information and content mediated by online platforms is legal, creates economic or social value by connecting users to the information they want or need, and forms the basis for innovation and creativity in the digital economy. However, the role of online platforms in spreading illegal or potentially harmful content continues to be at the centre of many digital policy debates. Recent concerns expressed in the context of spreading of fake news or defamatory content, have further put into question the efficacy of content governance online. Notably, the efficacy and legitimacy of the rules that govern the removal of content have been criticised by some, with a perception that content removal is sometimes excessive. At the same time, in other areas, feedback is that removal is often slow or ineffective (e.g. in the context of illegal hate speech postings), with illegal content removed too slowly or not at all. Furthermore, after content is removed it can be uploaded again almost immediately.

Different rules and procedures depending on the Member State, content type or platform type can further reduce the effectiveness of removal procedures, while cross-border effects further complicate the issue. Some Member States have enacted notice-and-action procedures applicable to hosting activities in their national legislation. This is the case in particular in Finland , France , Hungary , Lithuania , the United Kingdom , Spain and Sweden . Furthermore, Germany has recently announced specific legislation concerning social networks . Rules for content removal derive from national or EU legislation for the case of illegal content, in particular the E-commerce Directive, which established a harmonised framework for limitations of liability of intermediary service providers, complemented by the terms and conditions of online platforms. Safeguards against excessive removal of content usually fall within the discretion of the platform operators. Different, and sometimes contradictory, interpretations at national level of the regime on liability exemptions in the E-commerce Directive have led to a lack of legal clarity, which can prevent online platforms from taking more proactive voluntary measures. In particular, these liability exemptions are not available to service providers which play an active role in respect of the illegal third party content that they transmit or host. In the public consultation on online platforms, some platforms expressed the fear that taking proactive voluntary measures would prevent them from benefiting from the liability exemption, as they could no longer be seen as neutral, passive and technical, and thus expose them to legal risks. Although the Court of Justice has already provided clarification in respect of some of the key concepts of this regime, it appears that in practice several of those concepts are still seen as not sufficiently clear (e.g. what is actual knowledge, who can be considered a host), thus creating further legal uncertainty. Finally, civil rights associations, consumers, fundamental rights experts and national authorities complain about the lack of public accountability for the mechanisms by which online platforms take decisions regarding removal of content. Many takedown decisions are taken by online platforms alone, and are perceived as lacking the necessary checks-and-balances, such as transparency or public oversight. These procedures not only impose burdens on platforms, but they also typically lack safeguards against unwarranted removal or effective redress mechanisms. The public consultation conducted in 2016 showed that the majority of respondents demanded either clarification of existing or the introduction of new safe harbours, as the liability exemptions of the E-commerce Directive are known. The most commented safe harbour was that for hosting service providers (Article 14), in particular in relation to the concept of "passive and neutral role”. When asked specifically about this concept, many respondents complained above all about the divergent interpretations at national level. Several respondents supported providing clarification by means of soft-law measures such as recommendations issued by the Commission. A great majority of respondents (70.6 %) supported a differentiated approach as regards notice-and-action, without abandoning the notice-and-action system as such, but rather adjusting or improving the practice of action for a specific type of content; an overwhelming majority of respondents supported establishment of a counter-notice mechanism (82.5 %). Finally, a significant majority of respondents (76.7 %) demanded more transparency on the intermediaries' content restriction policies (e.g. number of notices received) . These percentages echo almost identical results in the preceding public consultation of 2012 on notice-and-action procedures. In the context of the EU Internet Forum, the EU Internet Referral Unit set up at Europol in 2015 has played a key role in referring terrorist material online to the companies, successfully referring nearly 24,000 pieces of terrorist content to over 50 platforms . The quality of the referrals has received praise from the internet industry and resulted in material being removed in approximately 83.3 % of cases (some companies up to 100 % success rate). This figure may fluctuate daily between 80-96 %. In the case of illegal hate speech, a Code of Conduct on Countering Illegal Hate Speech was agreed with Facebook, Twitter, YouTube and Microsoft on 31 May 2016. The Code brought some important progress, as it ensures that the IT companies, upon receipt of a valid notification, review such requests in a majority of cases within 24 hours and not only against their rules and community guidelines but also where necessary against national laws transposing the Framework Decision 2008/913/JHA. It also extended the trusted flaggers network across the EU. The first evaluation report of the Code of conduct on hate speech shows that on average only 28 % of all notifications of alleged illegal online hate speech as defined by national law implementing Framework Decision 2008/913/JHA led to the removal of the flagged content and 40 % of all notifications are currently reviewed under 24 hours . Progress is expected by the second monitoring exercise, which will be carried out in 26 Member States, and whose results will be known by the end of May. As regards notices based on copyright infringements, Google reports that, during the last year, it has removed 912 million urls, 88.3 % of all urls notified. However, it also reports that 99.95 % of all URLs processed from the Trusted Copyright Removal Program in January 2017 were not indexed in the first place, but generated automatically by the notice submitter . A recent study on the notice-and-action system in place in the USA for copyright infringements showed that nearly a third (28.4 %) of submitted notices raised questions about their validity; looking at Google Image takedown requests only, this percentage rose to 70 %. The 2017 EU Justice Scoreboard will for the first time present data on the efficiency of interim measures on EU electronic telecommunications law and could facilitate a deeper assessment of the effectiveness of judicial interim measures in the field and assist Member States in improving their procedural rules. To fill remaining evidence gaps and to assess the need for intervention, an external study has been commissioned by the Commission to obtain a comprehensive picture of the existing legislation and case law in the field of intermediary liability (including notice and action), existing voluntary practices by intermediaries and detailed information on the costs and effectiveness of notice and action and voluntary measures, as well as the cost of legal fragmentation. The first results will be reported in mid-2017. Several workshops on different topics, like the impact of voluntary measures on fundamental rights or the difficulties faced by national judges when applying the E-commerce Directive, will also be conducted. 3.2.Developing the European Data Economy Policy Context The value of the EU data economy was more than EUR 285 billion in 2015, representing over 1.94 % of the EU GDP. Due to a year-on-year growth rate of 5.03 %, this value increased to EUR 300 billion representing 1.99 % of the GDP in 2016. The same estimate predicts that in the event of Europe's economy entering a higher growth path in the next years characterised by a stronger driving role of digital innovation and higher overall ICT investments as a share of GDP while the policy and legislative framework conditions around the data economy are put in place in time, the value of the data economy will increase to EUR 739 billion by 2020 representing 4 % of the overall EU GDP. The EU data economy employed around 6 million data professionals in 2015 and 6.16 million in 2016 which indicates a 2.6 % year-on-year growth rate. By 2020, it is estimated under the same growth scenario that the number of data professionals will increase to 10.43 million, with a compound average growth rate of 4.2 % if the policy and legislative framework conditions around the EU data economy are put right. Data companies are expected to grow at a compound annual growth rate (CAGR) of 4.5 % in the period 2015-2020 increasing to a total of 310,000 units in 2020. As far as data user companies are concerned, a moderate growth is expected in their number over the period 2015-2020 with a CAGR of 2.2 % increasing to a total of 724,900 units in 2020. However, regulation by local and national authorities can lead to market fragmentation and reduces possibilities for economies of scale and scope for cloud computing, data-driven services, science and the Internet of Things. Nevertheless, such measures are sometimes based on the protection of legitimate interests. However, recent technological developments are making some of these interventions disproportionate with respect to their public policy objectives, resulting in inefficient outcomes. To prevent this, a series of technical and legislative barriers may need to be addressed. In particular, some types of data localisation restrictions hampering a wider adoption of cloud and other data services should be scrutinised. What has been delivered? Building a European Data Economy Communication The Communication on Building a European data economy was adopted in January 2017, accompanied by available evidence. It addressed a series of issues that were mentioned in the Digital Single Market Strategy as essential for innovation in a data economy based on big data, cloud services and the Internet of Things (industry 4.0). It also outlines a number of options for policy intervention, which are being assessed by the Commission based on the input of stakeholders through the online public consultation conducted from 10 January till 26 April 2017 and through structured dialogues with Member States. New developments and challenges a)Free flow of data - by removing unjustified localisation restrictions

The evidence collected so far, points to a growing number of unjustified or disproportionate national measures that require businesses or public administrations to store and/or process data locally within a Member State. For example, measures requiring the localisation of tax, accounting and company data could both create unjustified burdens for entities generating or otherwise processing or providing services in respect of such data and inhibit the growth of innovative data services in this field. However, some restrictions could potentially also be justified. The General Data Protection Regulation (GDPR) already ensures the free movement of personal data in the scope of its application. In relation to data which is outside the scope of the GDPR, the Communication urges Member States to be guided by a "principle of free movement of data within the EU" as a corollary of their obligations under the free movement of services and the free establishment provisions of the Treaty. It also announced the Commission's intention to take appropriate measures on the free flow of data, including, where necessary, the launch of infringement proceedings to address unjustified or disproportionate data localisation measures, in line with Better Regulation principles, and, if necessary, further measures on the free flow of data. The December 2016 European Council Conclusions called for the removal of remaining obstacles within the Single Market, including those hampering the free flow of data. In a letter of 13 December 2016 to President Tusk from the Heads of State or Government of 16 Member States an early legislative proposal providing for the free flow of data is considered crucial to avoid market fragmentation and further obstacles to the development of the data economy in the EU. b)Emerging issues The above-mentioned Communication presents possible ways forward with regard to issues that are currently typically governed by contracts rather than covered by existing regulation: a) access to and re-use of commercially-held non-personal or anonymised data, without stifling innovation; b) addressing the extra-contractual liability challenges, including in terms of safety, for damage caused by products and services that are connected through the Internet of Things or operate as autonomous systems. The latter issues are mainly linked to the difficulties of applying concepts as "defect" or "product" in a context of increasing interaction between autonomous devices and humans and of products being bundled with services that dramatically increase their utility and value; c) possible introduction of a portability right for non-personal data. An experiment and test trial on cooperative, connected and automated mobility is proposed in order to test the suitability of possible solutions for data access and liability. c)Complementarity with general personal data protection rules The approach proposed by the Communication is complementary to the General Data Protection Regulation, which bans restrictions to the free movement of personal data within the EU where these are based on reasons connected with the protection of personal data. The Commission is working with Member States and national data protection authorities within the framework of the Article 29 Working Party to ensure effective and uniform application of the new legislation at national level. The confidential transmission of both personal and non-personal data via public electronic communication networks is covered by the current ePrivacy Directive (to be replaced by the current proposal for ePrivacy Regulation). Restrictions based on reasons other than the protection of personal data, e.g. under taxation or accounting laws, are not covered by the General Data Protection Regulation and could be covered by the free movement of data principle proposed in the Communication. Moreover, the GDPR regulates only the processing of personal data, which means any information relating to an identified or identifiable person. Therefore, under the "emerging issues", the scope of any further action is on non-personal or anonymised data, e.g. machine-generated or industrial data. d)Cloud market and governance in the EU The Cloud-Select Industry Group (C-SIG) established in 2013 to allow stakeholders to collaborate on the implementation of the actions set out in the 2012 European Cloud Strategy, has prepared and presented a Data Protection Code of Conduct for cloud service providers relating to the processing of personal data, to a newly established stakeholder General Assembly. The Code is not yet fully compliant with the GDPR and it has not been approved by the Article 29 Working Party under the current Data Protection Directive 96/46/EC. The "C-SIG Code" has also been used as a model for a more specific code of conduct for cloud infrastructure providers (CISPE). This is at a similar stage of development and has not yet been approved under EU data protection legislation. The Commission will continue supporting the development of such initiatives and encourages the submission of the resulting codes for approval according to the procedures provided by the data protection legislation. Building on the expert group on cloud computing contracts which looked into the issue of contract terms and conditions for B2C and B2B cloud computing services, in December 2015 the Commission tabled a proposal for a Directive on certain aspects concerning B2C contracts for the supply of digital content which provides for harmonised consumer protection rules against defective cloud services and lock-in. Following up on the work of the expert group, further evidence gathering is being launched to identify whether further action is warranted on B2B to protect (certain) business users of cloud computing services contracts. These actions are expected to contribute to fostering a trustworthy single market for cloud services. e)Improving re-use of data collected by public sector bodies Public sector bodies collect valuable data as a result of the execution of their public tasks. The Commission is striving to ensure the re-usability of such data through the provisions of Directive 2003/98/EC (as amended by Directive 2013/37/EU) on Public Sector Information. This Directive shall be reviewed before 18 July 2018. The upcoming evaluation of Directive 96/9/EC on the legal protection of databases will also look into the issue of re-use of such data from a database protection point of view. The Commission makes data it holds itself re-usable under the provisions of Regulation (EC) 1049/2001 and Decision 2011/833/EU. It funds web portals facilitating the findability of public sector information such as the European Open Data Portal. Researchers undertaking actions funded on the basis of public grants (either from the EU's framework programmes or from national R&D&I programmes) also produce valuable data as a result of their research actions. The Commission therefore mandates recipients of EU grants to apply an Open Access policy to such data unless legitimate grounds justify an 'opt out'. It recommends Member States to do the same. The implementation of this policy is subject of a review. f)Sharing, access and use of spatial data in Government to Government and Government to Business context Following the REFIT evaluation of the INSPIRE 2007/2/EC Directive , the Commission and Member States agreed on a 2016-2020 work programme aimed at closing implementation gaps and improving the fitness-for-purpose of the INSPIRE measures in view of greater synergies with the actions under the Digital Single Market. This has led to the increased availability online and use of spatial data in a wide range of applications and economic sectors. Through the work programme further legal and technical obstacles to the sharing and re-use will be addressed in full coherence with the principles of the European Interoperability Framework and the Directive 2003/98/EC .

Source: INSPIRE official monitoring dashboards , May 2016. g)Data for smart cities and communities There are several initiatives at EU level for Smart Cities such as the European Innovation Partnership on Smart Cities and Communities, the European Energy Research Alliance (EERA), the Joint Programme on Smart Cities, the ERA-NET on Smart Cities and the Joint Programming Initiative Urban Europe. The Commission is gathering information from the monitoring of these projects and platforms in the EU Smart Cities Information System. In particular, the European Innovation Partnership on Smart Cities and Communities aims to bring together 100 cities and 100 firms in areas like electro-mobility and mobility services, intelligent lighting or building blocks with positive energy balance. The partners work in a "Market Place", a platform to develop and replicate solutions. The Commission also contributes actively to the EU Urban Agenda improving legislation, funding instruments and knowledge on urban priorities. Three of these priorities are linked to smart cities and communities: digital transition, energy transition and urban mobility. In Finland the project Open Data of the Six Cities (EUR 1.3 million) establishes cooperation models with companies and other developers as well as launches actions for developing and facilitating data-based business in the six biggest cities of the country. Other successfully implemented projects in this area include the JIC Innovation Park: A catalyst for innovation and growth in South Moravia in the Czech Republic and the project Apulian ICT Living Lab aimed at boosting digital innovation in southern Italy. h)Agriculture and food data While the implementation of precision farming and smart manufacturing technologies is already a reality, a comprehensive digital ecosystem integrating existing technologies is still needed to gather all the relevant individual data which are needed for the monitoring, control and treatment on farms and along the food chain in a particular region. Such future data management and exchange scenario would allow monitoring and control of plant and animal products during the whole life cycle 'from farm to fork' including nutrition. It should also help farmers' and processors' decision making with regard to the use of inputs and management processes e.g. pesticide control, nutrient and water management, lowering ecological footprints and economic costs as well as increasing food security, as well as enable consumers to access trustworthy information about the traceability of products. There is a broad range of existing and conceptual data sharing models in agriculture and food but here is no consensus or uniform approach yet on which type of data governance models are the most suitable to protect and satisfy the interests of the different parties involved in the agri-food chain. Especially relevant is the role of the farmers in this new data governance scenario. There is no consensus on which should be the most promising data governance model for the benefit of farmers (better position in the market, increase their production performance etc). Generally speaking there is demand for more openness. However, there is also a concern that the use of big data by market dominant players in the sector will exacerbate existing market power imbalances (concentrated upstream and downstream sector in relation to a fragmented mass of farmers and food SMEs). Clear models to share digitisation benefits are needed. Interoperability and proven business models combining different data sources are paving the road for data-based innovation in agriculture. Nevertheless, a part of the agricultural and food community is asking for more security and rights on data. Crop monitoring with aerial robots can reduce the use of pesticides by about 75 %, by better targeting the areas to be treated. 3.3.Fostering a trustworthy cyber ecosystem: Tackling cybersecurity challenges together Policy Context Cyber threats are a borderless problem and have a negative impact on EU economy, on citizens' fundamental rights and on society. The growing number of offences (for instance data interception, online payment fraud, identity theft, trade secrets theft) is leading to significant economic losses. They often result in disruption of services, fundamental rights violations and undermine citizens' trust in online activities. For example, more than 4,000 ransomware attacks have occurred every day since the beginning of 2016 (a 300 % increase over 2015). In the case of hybrid threats, cyber-attacks can be used in a coordinated manner with other activities to destabilise a country or challenge political institutions. Member States and EU institutions have long acknowledged the need to protect our networks and critical infrastructure and to respond effectively to cyber-threats, leading to the adoption of the 2013 European Cybersecurity Strategy. In 2016 the Directive on Security of Network and Information Systems (NIS Directive) was adopted and in the meantime many Member States started developing national cybersecurity strategies to address the growing challenge. An important body assisting Member States and the Commission is the European Union Network and Information Security Agency (ENISA), which is undergoing evaluation at the moment. One of the key priorities of the European Cybersecurity Strategy to develop industrial and technological resources for cybersecurity. For the period 2014-2016, the EU has so far invested EUR 160 million under H2020 in cybersecurity research and innovation projects.

EU investments in cybersecurity: MUSES - EU-funded researchers have developed and tested a new corporate cyber security system – designed to fit with current trends of working on multiple devices – and identified a simple way of making corporate cyber space safer and more secure. The MUSES consortium ran a number of field trials and found that the introduction of MUSES' usable corporate security led to a decrease in incidents due to improved user behaviour. EVIDENCE (European Informatics Data Exchange Framework for Courts and Evidence) : The project proposes standardized solutions to maintain and prove the integrity of the digital evidence to enable policy makers to realize an efficient regulation, treatment and exchange of digital evidence; and law enforcement agencies as well as judges/magistrates, prosecutors and lawyers practising in the criminal field to share a Common European Framework to gather, use and exchange digital evidences according to common standards and rules. However, at the time of announcing the Digital Single Market Strategy specific gaps were identified in the fast moving area of technologies and solutions for online network security. A more joined-up approach was needed to step up the supply of improved secure solutions by EU industry and to stimulate their take-up by enterprises, public authorities, and citizens. In addition, the lack of interoperable solutions (technical specifications), practices (process specifications) and EU-wide mechanisms of certification was identified as one of the gaps affecting the single market in cybersecurity. In March 2017 the Scientific Advice Mechanism High Level Group published an Opinion on Cybersecurity recommending to support the development of evidence collection methods, including sharing of evidence and best practices of cybersecurity-related information between EU Member States; to improve the mutual trust between national entities (e.g. CERTs) so that intelligence information can be more freely disseminated between stakeholders; to develop and monitor cybersecurity standards and practices, and to provide sufficient authority and resources to do so, including adequate technical expertise in European bodies. What has been delivered? A Communication on Strengthening Europe's Cyber Resilience System and Fostering a Competitive and Innovative Cybersecurity Industry - In July 2016, the Commission, building on the Digital Single Market Strategy commitment and on one of the 22 actions under the Joint Framework on countering hybrid threats, adopted a Communication on Strengthening Europe's Cyber Resilience System and Fostering a Competitive and Innovative Cybersecurity Industry. This Communication encourages Member States to make the most of the cooperation mechanisms under the NIS Directive and to improve the way in which they work together to prepare for a large-scale cyber-incident. It also outlines a number of measures to support the emerging single market for cybersecurity products and services in the EU. Some of the key initiatives under the Communication include: A contractual public-private partnership (cPPP) with industry - The Commission and representatives of the stakeholder association, the European Cyber Security Organisation (ECSO), signed the contractual arrangement underpinning the cPPP on 5 July 2016. Between 2017 and 2020 the EU will invest up to EUR 450 million in this partnership, under its research and innovation programme. Cybersecurity market players are expected to invest three times more, bringing the total investment value to EUR 1.8 billion. At the moment ECSO gathers more than 180 organisations including big and small companies, associations, public and regional authorities having a stake in cybersecurity. Certification - The Commission, in cooperation with the Joint Research Center (JRC) and the European Union Agency for Network and Information Security (ENISA), organized two workshops with representatives of Member States to define the scope of a possible initiative in the field of certification of ICT products and solutions. In cooperation with the Alliance for Internet of Things Innovation (AIOTI), the Commission also organized three workshops with representatives of the industry on increasing trust in the Internet of Things and the minimum requirements for security and privacy in the Internet of Things. As a part of the evidence gathering exercise a study has been launched. In the course of 2017, several workshops will be organised with a specific aim to facilitate dialogue between experts from MSs and private sector, both from the ICT suppliers, integrators and users industry. ENISA's review - In 2016, the Commission started the review of the ENISA Regulation by presenting the initial roadmap for evaluation and launching a public consultation between 18 January 2017 and 12 April 2017. The evaluation is currently ongoing, supported by a study launched in November 2016, and it is expected to be completed in the second half of 2017. Cybersecurity in key sectors - In December 2015 the Commission launched an Expert Group (Energy Expert Cyber Security Platform-EECSP) to analyse the energy sector specific needs in terms of cybersecurity and to reinforce the implementation of the Directive concerning measures for a high common level of security of network and information systems across the Union at energy sector level. In addition the Commission will also establish stakeholder working groups under the Smart Grids Task Force to further elaborate a technical framework on energy-specific cybersecurity and common consumer's data format. The structure, scope and planning of the groups will be ready by spring 2017 and final results by the end of 2018. In aviation, the European Centre for Cyber Security in Aviation (ECCSA) was set up in 2016 to support the common effort of building increased resilience and responsiveness to cyber risks in the sector. The EU funded the Smart Grid Protection against Cyber Attacks (SPARKS) project whose focus was to develop a range of solutions that can be used to mitigate threats to the electric smart grid. The project developed approaches to risk assessment, including processes and tools, which can be used to evaluate how severe the risk is from emerging threats that