Memorandum by AOL UK
It is a great honour and privilege to address
the Sub-Committee on the European dimension to e-commerce. E-commerce
is an inherently cross-border activity, and the role of the European
institutions, as well as more global bodies, will be vital in
liberating its true potential.
AOL UK is part of AOL Europe, the leading Internet
and e-commerce services company, with a pan-European staff of
more than 2,000. AOL Europe operates the leading AOL, CompuServe
and Netscape Online services, in nine countries and four languages
From the first service launch in 1995, AOL Europe's
AOL and CompuServe membership base now surpasses 3.4 million across
Europe and Netscape Online has more than 400,000 registrants in
the UK. AOL Europe SA is a joint venture between America Online
Inc and Bertelsmann AG with executive offices in London and Hamburg.
Perhaps the single most important reason for
our success in Europe has been our continuous emphasis on building
consumer confidence in the online medium. This starts from the
ease of use of our software to get you connected to the Internet,
through the user friendly e-mail system, our simple to navigate
online informationincluding full access to the Internetto
the consumer friendly "AOL Shopping Channel".
1. What needs to be done to create confidence
and to stimulate e-commerce?
Confidence is, though, a two way streetboth
consumers and business need confidence before they embrace online
commerce. Both parties want legal certainty about the contracts
they form online, including the legal recognition of electronic
signatures, and clarity about privacy protection requirements.
In addition, there is the vexed question about
consumer protection legislation, and whether the rules of the
country of the supplier or of the consumer should apply to cross-border
purchases. Here it is worth drawing a parallel with high street
shoppingconsumers rarely resort to court actions as most
complaints can be dealt with in the shop itself. The same needs
to be available online, and this is being developed by business
through codes of conduct that web-based retailers are taking up
to provide additional consumer re-assurance in addition to the
all important brand name.
As regards legal protection, the EU has already
harmonised most of the key parts of consumer protection legislation.
Arguably, the remaining idiosyncrasies of national law offer little
extra consumer protection but considerably more complexity for
SMEs thinking of establishing themselves on the net. As a result,
AOL, which is simply an intermediary between buyer and seller,
does favour the application of the law of the country of supplier.
In addition to the legal requirements, there
are also practical changes to the online experience that need
to be addressed, and in particular AOL has consistently called
for the end of per-minute telephone call charges. It is unthinkable
that a high street shop would charge for the time you spent browsing,
but yet this is exactly what online shoppers face. BT's offer
of so-called unmetered access should have been the solution, but
at £35 a month, we are not convinced it will get mass market
uptake and so more work is needed here.
2. Does the European Commission's draft Action
Plan "eEurope: An Information Society for All" offer
a realistic means of promoting e-commerce in the EU?
e-Commerce is inherently international, and
it is clear that action at the EU level is vital, as well as at
the global level. The special Lisbon Summit is therefore timely
to boost the political momentum to launch the digital economy.
The Commission's contribution to this debate has been the eEurope
communication released just before Christmas.
AOL has naturally welcomed the Commission's
target of getting every citizen, business and administration online.
Nothing could be closer to our own vision.
However, eEurope is something of a shopping
list, and fails to provide a convincing picture that it has understood
the European e-economy and what needs to be addressed. In part,
this is because it sought briefly to list new initiatives that
need to be undertaken, and also because many of the necessary
steps do not lie in Commission and European Union competence.
Because European decision making processes are slow, it also cannot
establish the sort of short deadlines necessary to keep pace with
the Internet that were such a welcome feature of the UK Goverment's
On the other hands, the value of European debate
is that everyone can learn from each other, although it is vital
that we do not just compare amongst ourselves, but also keep both
eyes on the US, which still remains far ahead.
3. Will codes of conduct and co-regulation
provide sufficient protection? Is there a case for intervention
by national governments and the EU?
A basicand welcomeobjective of
eEurope is to establish high level political momentum to accelerate
the adoption of the remaining EU Directives in the e-commerce
area. One of the critical pieces of legislation in the pipeline
is the so-called "e-Commerce directive", which regulates
certain legal aspects of e-commerce. The Common Position on this
Directive is now pending adoption. The Council has not substantially
changed the Commission's proposals, but it has quietly loosened
many of its provisions and created the possibility of different
interpretations by member states when they come to transpose the
One such example is the encouragement of self-regulation
that was a major feature of the commission's proposals. This is
an entrenched part of the British regulatory environment and particularly
suitable for the fast moving Internet environment and needs further
reinforcement by the Parliament together with countries that recognise
the full value of self-regulation.
4. Do the institutions of national government,
on the one hand, and the European Commission, the Council of Ministers
and the European Parliament, on the other, function with sufficient
flexibility and coherence to promote the EU's objectives in the
field of e-commerce?
Getting the legislation adopted is therefore
an important first step towards achieving coherence in the single
market, and the Lisbon Summit will help align the political vision.
The European Commission then needs to take this vision and work
with member states to ensure its effective implementation. This
will mean going beyond the traditional monitoring of the transposition
of Directives, and could extend to benchmarking the costs of Internet
access, the proportions of websites publishing privacy principles,
as well as simple measures of the level of e-commerce taking place.
5. Should existing EU institutions' internal
structures be changed, or new ones created, to improve policy
development and co-ordination?
I have already mentioned the e-Commerce Directive,
which will shortly return to the European Parliament for its second
reading, and the conciliation process might be triggered thereafter.
In fact, the Commission adopted its original proposals in November
1998, and it is clear that the legislative process at EU level
is slow by comparison to the development of the Internet. (An
even more dramatic example is the crucial Copyright Directive
which has still not achieved a Common Position and was published
a year earlier than the E-commerce Directive.)
The Amsterdam Treaty will help, and the Commission's
emphasis on public consultation should also ensure that future
proposals are capable of securing simpler political agreement
by Council and Parliament. But only time will tell whether the
new procedures can be harnessed to speed up the legislative process
of whether institutional infighting will remain the name of the
Following the publication of firstname.lastname@example.org,
the UK government established an "E-Envoy" to oversee
co-ordination of government action to promote e-commerce. This
was instead of a root-and-branch reorganisation of government
departments to ensure the necessary policy coherence. It is not
difficult to identify the same sort of need for coordination in
the EU institutions, especially in the Commission.
Another area of particular concern is the multitude
of virtually secret EU committee meetings that take place to monitor
the implementation of Directives. While most governments now recognise
the value to them of private sector consultation on Internet related
issues, the arcane procedures of EU committees deliberately exclude
the private sector from their deliberations. This needs to be
6. How can structural change be brought about
fast enough to accommodate to the growth of e-commerce?
In conclusion, while there is a lot that the
EU could do to facilitate e-commerce, it has to be recognised
that this new medium is still very much in its infancy. The most
important thing any government can do is to remove inadvertent
obstacles to the development of e-commerce. From this perspective,
the fact that the EU can be slow to legislate might prove an advantage.
Meanwhile, the goal of creating a single market
is even more vital now that cross-border shopping is so much more
readily achievable in the Internet era. It would, in particular,
be a catastrophe if consumer protection concerns would lead to
a fragmentation of the single market at just the time that the
Internet enables citizens to shop all around the EU from the comfort
of their own home.
Thank you very much for providing me with the
opportunity to address you today, and I am of course available
to answer any further questions you may have.
16 February 2000