Bird & Bird's Senior Public Affairs Manager, Francine Cunningham, explains what the new EU digital Czar could mean for the digital sector. What are Margrethe Vestager's plans and priorities, and what challenges will she face?

Very different fates have befallen the candidates for the two most important digital posts in the incoming EU College of Commissioners. France is hoping that its new candidate for the post of Internal Market Commissioner, former Finance Minister Thierry Breton, will win the acceptance of the European Parliament, following two difficult Hearings and the ultimate rejection of the country’s initial choice, Sylvie Goulard. Meanwhile the Danish Liberal politician, Margrethe Vestager, who was nominated as the new Executive Vice President for a “Europe fit for the Digital Age” and Competition Commissioner, had a relatively smooth road to acceptance by Members of the European Parliament. Vestager has, nevertheless, faced questions about how she will avoid conflicts of interest in her future dual role as digital law maker and competition chief.

Margrethe Vestager’s track record as a star performer of the outgoing Juncker Commission no doubt helped to persuade MEPs of her credentials for this challenging position. Her high profile as Competition Commissioner 0ver the last five years can be attributed largely to the tough approach she took in investigations into multinational technology companies. This stance won her notoriety with U.S. President Donald Trump, who famously referred to her as Europe’s “tax lady” and suggested that she hates the United States.

In the next Commission, which is now expected to begin its work in December, Vestager will have her new powers to shape the digital business landscape. The Executive Vice President-designate has underlined the need to apply what she called European strengths and values such as “trust, humanity and fairness”, to fast-moving, digital markets that are affecting every part of our lives.

Her responses during a European Parliament Hearing earlier this month, and subsequent statements, have produced some specific insights into the Commission’s digital policy priorities for the next five years.

European approach on Artificial Intelligence 

Vestager will coordinate work on a European approach to artificial intelligence, with a legislative proposal due to be presented in the first 100 days of the new Commission. She noted that Europe is lagging far behind competitors when it comes to investing in AI. During the Hearing, she emphasised the need to develop AI, built according to “trust by design”, that would serve humans. The Executive Vice President-designate also acknowledged the risk that automated decision-making could cement inequalities and highlighted the need to maintain human oversight.

Digital Services Act to upgrade rules on digital platforms 

The Executive Vice President-designate said that she would work on a new legislative proposal −”Digital Services Act” – that would include “upgrading our liability and safety rules on digital platforms, services and products.” This Act is expected to review and potentially update aspects of the e-Commerce Directive which dates from the year 2000 and is widely regarded as a pillar of the digital economy. Vestager acknowledged that a strong debate will be unleashed if the Commission opts to revise this Directive, which notably includes a “hosting defence” protecting online platforms from certain forms of liability. Vestager also stated that the proposal may need to regulate the way that companies use and share data, so that it benefits society in general. In addition, the Act would address the working conditions of platform workers in the collaborative economy.

Reaching a global consensus on digital corporate taxation 

Vestager has undertaken to coordinate, within the Commission, work on digital taxation in order to find a consensus at international level by the end of 2020. She noted that the OECD is currently working towards finding a global consensus on this issue. If such an agreement is not reached by the end of 2020, then the Commission is prepared to propose “a fair European digital tax”. The aim of the Commission would be to ensure that where a company does business and where it generates its profits, it should also pay taxes.

Looking for remedies beyond competition tools

In response to questions from MEPs about fighting the “monopoly power” of tech giants, Vestager stated that breaking up companies is an available tool but that she had an obligation to use “the least intrusive tool in order to restore fair competition”. She also acknowledged the limits of competition law, especially when applied to fast-moving digital markets. That is likely to have been one of the reasons why the Commission decided on 16^th October to impose, for the first time in almost two decades, interim measures suspending certain loyalty clauses in chipset distribution contracts pending the outcome of a full EU antitrust inquiry. The Executive Vice President-designate suggested that competition decisions should look at what needs to be changed in the future, rather than relying on fines in relation to past behaviours. This might potentially require consideration of what she called “remedies that are much more far-reaching”‘.

Ongoing concerns about managing a dual role

While approval of Vestager’s candidacy was never in doubt, ongoing concerns have been expressed about how the Danish politician will balance her work in her two main areas of responsibility. Speaking at a press conference in Brussels on 16^th October, Vestager underlined that all legislative proposals will be subject to “collegial decisions” and suggested that there had always been “a very constructive familiarity between law enforcement and regulation.” She emphasised that the Commission has habitually gained knowledge, for example from sector inquiries, which had then informed regulation. As she prepares to start her new role, it is clear that many media and technology businesses will closely scrutinise Vestager’s every move to see how she will combine her all-powerful dual role as digital czar and competition law enforcer.