Measuring the cost of proposed regulation of e-Privacy in Europe

Both the European Parliament and Council are now engaged in heated negotiations on the new ePrivacy proposal designed to protect the confidentiality of communication. Everyone agrees that this goal is laudable – when an email arrives in your mailbox, no one except you should be able to read it. But both traditional and new digital businesses fear that the new rules will kill online advertising and stymie innovation. At a CEPS meeting on November 28th, two researchers presented new studies that aim to measure the economic impact of the proposed ePrivacy legislation.  Anja Lambrecht from the London Business School has attempted to calculate the impact of the 2002 ePrivacy law on venture capital (VC) spending in Europe.  Focusing on three areas – online news, online advertising and cloud computing – she found a decline in VC investment by up to 75% in these three fields in Europe compared to the United States. René Arnold  from WIK Consulting looked forward, outlining the expected social and economic impact of the new ePrivacy Regulation. He criticised the proposal as a misguided attempt to throttle new technologies. Axel Voss, a German member of the European People’s Party in the European Parliament, agreed, suggesting that the law would leave Europe far behind its global competitors in Big Data innovation. Privacy advocates suggest that the new rules could help rather than hinder business. They point to studies showing that consumer use of the internet rises when they are confident about the confidentiality of their communications. So far, their point of view is prevailing - the European Parliament recently voted down an attempt by the European People’s Party to water down the proposed ePrivacy law.

Click here to watch video of the event.