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France calls for EU to regulate Web giants to counter dominance

By Leila Abboud

PARIS (Reuters) - France is pushing for the European Union to regulate global internet companies like Google Inc, Amazon.com Inc and Facebook Inc more aggressively, to counter their growing dominance over online commerce and services.

In an interview published by Liberation newspaper on Thursday, France's minister for the digital economy, Fleur Pellerin, said Europe needed new regulatory powers to intervene much earlier, to level the playing field in the internet economy and allow the emergence of alternatives in Europe to U.S. Web giants.

She said Europe needed to be able to act quickly, as soon as problems are identified, rather than getting tied up in lengthy and costly disputes that did nothing to help consumers.

"The current tools of competition law are totally unsuited to the fast-changing world of the Internet," Pellerin said in the interview conducted in French. "To get out of this impasse, Europe needs a regulatory authority to act on an ex-ante basis, as soon as conflicts and abuse emerge on the part of internet platforms."

The idea is part of a broader proposal laid out by France ahead of an October 24 European summit on the digital economy, the Internet and innovation. Other elements include revamping tax rules to ensure Web companies pay tax on the profits they make in the European Union, an EU source said, as well as stricter rules on the protection of personal data online.

The Wall Street Journal, citing French briefing documents ahead of the summit, said France would ask the European Commission to draw up proposals by spring 2014 aimed at "establishing a tax regime for digital companies that ensures that the profits they make on the European market are subject to taxation and that the revenues are shared between the Member States, linking the tax base to the place where the profits are made."

The tax proposals and idea of a new regulatory body are likely to prove controversial with some member states that favor a hands-off approach to the Web, as well as the United States, home to the largest internet companies and already at the center of a debate over surveillance after revelations about the National Security Agency by former intelligence contractor Edward Snowden.

An adviser to Pellerin said that France would ask the European Commission to study how "ex-ante" - or anticipatory regulation - of internet services could function and what sort of agency would be needed.

Then the work of passing a regulation or a directive could be carried out by the next EU Commission, which will be in place by early 2015 after parliamentary elections.

(Additional reporting by Charlie Dunmore in Brussels; Editing by Eric Walsh)

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