A Parliament committee within the European Union recently voted for a bill that would protect citizen’s private information on the Internet from being used by companies without their consent[i]. In 2012, the E.U. signed a directive that companies could only use a citizen’s private data for specified reasons[ii]. The new bill’s tightening builds off this directive and further contrasts consumer privacy against profit and growth opportunities for worldwide businesses. The bill’s ban will affect all companies regardless of location and affects every E.U. citizen. Debates over the bill highlight significant issues affecting European Integration such as consumer protection and the free movement of goods, growth and business policies.

 

The issue with consumer protection is that is must be balanced with the free movement of goods. The E.U. wants to protect consumers from unknowingly letting companies use their information. The free movement of goods is the movement of private data to companies for research, advertising and product targeting. While free movement of goods means there are no barriers to entering a market, here it means there are no barriers against these companies from gathering a citizen’s data. As shown with the German Beer Purity case, too much emphasis on one priority is not tolerated[iii]. The Policy Possibility Frontier, in the Appendix, graphically demonstrates the balanced priorities[iv]. This bill argues that too much emphasis is on the free movement of goods so consumers need the E.U.’s protection.

 

Prevention of market abuse is one way the E.U. protects consumers. The bill’s wide ban mimics the E.U.’s attitude towards market abuse, as seen in Article 101 of the TFEU. Market abuse occurs when a company with market dominance uses their power in a way that harms consumers[v]. Market dominance occurs with large and influential companies, such as the technology companies targeted. Market abuse is addressed in this bill because consumers cannot control which details of their lives are being used. However, just like an exemption is granted for market dominance if the company proves they are not abusing their power, an exemption would be granted for companies if the citizen consents to his or her information being used. One way the E.U. protects its citizens is by restricting specific corporate actions.

 

Due to these restrictions, American officials and technology companies are expected to lobby heavily against the bill. Some technology companies have already pressed officials, causing the vote to be delayed twice since April. If lobbying occurs, this would not be the first time an American company was in a dispute with European trade measures. The ongoing trade dispute between Boeing and Airbus proves how the actions of the E.U. affect America’s ability, and the companies globally, to participate in the same market[vi]. This bill restricts all companies regardless of location, further showing how economic actions of the E.U. have a global impact on growth.

 

Mancur Olson believes lobbying is extremely harmful. He theorizes that in the 1950’s governments were new and did not respond to lobbying, accelerating growth[vii]. As governments aged, lobbyists gained influence and growth slowed. Meanwhile, Charles Kindleberger argues that growth witnessed in the 1950’s was because workers moved to the more productive industry[viii]. This is consistent with the argument made by technology companies that industries can use data to create economic growth and employment opportunities. Olson and Kindlerberger’s different views further demonstrate different ways the bill can be approached.

 

A country that is concerned primarily with its citizen’s privacy would most likely take Olson’s view. A country more concerned with the economy would be more inclined to trust Kindleberger and vote against the bill. Alessina and Perotti address these disparities. The E.U. requires cooperation and support of twenty-eight different nations, each with different motivations, histories and morals[ix]. While some members are concerned about consumer protection, others are more concerned with the E.U. adjusting to the technology age. This bill epitomizes how European Integration will constantly face obstacles due to different goals by different countries.

 

Growth and consumer protection are critical issues in the E.U. The main goal of the bill is to protect consumers from companies by unknowingly giving away private information. The core argument against the bill is that it would hinder the opportunity for economic growth and employment. This argument loses caliber when one considers that if technology companies create employment, high levels of employment would already occur in countries with high concentrations of technology companies. Countries with low levels of employment would therefore have a low concentration of technology companies. By this reasoning, the new employment opportunities would not have a large immediate affect on countries with low employment rates, the countries that need employment the most. In this sense, this bill is more about protecting consumers than facilitating business growth.

 

Bibliography

[i] Kanter, James. "Rules Shielding Online Data from N.S.A. and Other Prying Eyes Advance in Europe." New York Times 21 Oct. 2013. Print.[ii] "Justice: Protection of Personal Data." European Commission. European Commission, 16 July 2013. Web. 22 Nov. 2013. <http://ec.europa.eu/justice/data-protection/>.[iii] Commission v Germany.[iv] Appendix. Adams, Jim. Econ 453, Product Standards.[v] Article 102, Treaty on the Functioning of the European Union.[vi] Pavcnik, Nina,“Trade Disputes in the Commercial Aircraft Industry.” World Economy, May 2002, 733-751.[vii] Olson, Mancur, “The Varieties of Eurosclerosis: The Rise and Decline of Nations since 1982.”[viii] Boltho, Andrea, “Growth.”[ix] Alesina, Alberto and Perotti, Roberto, “The European Union: A Politically Incorrect View.” Journal of Economic Perspectives, Fall 2004, 27-48.

 

Appendix 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In the German Beer Purity case, Germany was accused of putting too much emphasis on Consumer Protection by limiting what types of beer could be sold in Germany. Germany’s policy would be placed at G. The Commission decided that Germany was restricting the free movement of goods from other European countries, and felt that Germany could embrace the free movement of goods without affecting their citizen’s health and welfare. Germany’s beer policy moved to G’. Before 2012, the free movement of data was at E. In order to further protect citizens, that bill adjusted the free movement of data to be at E’. The current bill would adjust the free movement of data to be at E” so that consumers would be as protected as possible against use of their information. However, if a consumer consented to the use of his or her data, their protection would move back towards E.