Europe must not try to regulate the internet

Joanna Shields Europe's digital economy ministers have recently met in Paris to discuss the future. Their agenda has been obvious. The internet has been the bright spot in an otherwise bleak European Union (EU) economy. The eurozone economy is expected to contract by 0.4 per cent in 2013. By contrast, the internet economy in the Group of Twenty (G20) countries is forecast to grow by 8.0 per cent each year for the next five years. The internet has lowered barriers to entry and made it easier than ever for people to set up their own businesses and to become entrepreneurs. In Europe, we already have best-in-class tech businesses such as Swedish music streaming service Spotify, Finnish games developer Supercell, French display advertising business Criteo and British companies such as Just Eat, Mind Candy and Zoopla. The "internet economy" is also much broader than many people realise. Every business is an internet business to some extent. Many of our best-known, global companies are using digital innovation to bring better products and services to their customers. The agenda for European governments should be clear: concentrate on policies that enable new business creation and encourage established businesses to innovate through technology. Create incentives for risk-taking to counter the worrying decline in venture capital investment. Make it quick and easy to start your own company and take the stigma out of failure by creating incentives that encourage entrepreneurs to try again. Embrace trade and fair competition and back innovation. The French government has tabled a series of measures designed to encourage growth and innovation. Many make sense and echo efforts we are pursuing here in the UK. But if measures pertaining to new regulation and taxation are as reported, they appear to be both protectionist in nature and potentially damaging to future innovation and global trade. For example, it sounds sensible to have US companies pay more tax in Europe. But the fact is we have a global tax system that taxes multinational companies where they create value. Indeed, the G20 and Organisation for Economic Cooperation and Development (OECD) are currently reviewing measures to reform the taxation of global companies. What is concerning about the French proposal is the idea of additional taxes levied exclusively on internet companies - in effect a tax on data transfers outside of the EU. As the internet economy is global, this proposal will harm our local start-ups as much as those from America and will restrict growth in the one sector that is showing promise. The real focus of governments should be on creating the necessary conditions for business growth and job creation. Far better to concentrate our collective energies on other policy levers that the French proposal touches on: support for innovation, developing public procurement from innovative small and medium-sized enterprises, increasing access to capital for start-ups and growth firms, boosting infrastructure and enhancing training and digital skills. Much thinking has already been done on this topic. Last month Neelie Kroes, EU digital commissioner, launched the EU Entrepreneur's Manifesto for Economic Growth - a 22-point plan created by eight of Europe's most successful entrepreneurs and business-builders representing countries including Spain, Sweden, the Netherlands and Germany. These concrete steps for innovation and growth have been validated by hundreds of investors and entrepreneurs from across the EU tech ecosystem. The manifesto is now gaining real momentum and has attracted signatures of support from many thousands ahead of being presented to the European Council at the end of October. The UK has opened a dialogue with business and start-ups to create the world's leading policies for business-builders and entrepreneurs. The right policies and investments in technology and skills have helped catalyse digital innovation in the UK, driving a movement of entrepreneurship around the country. EU nations should consider carefully how to ensure their economies profit from these internet enterprises, new jobs and greater economic dynamism. That is the real prize. The new global economy is digital and those countries that support the growth of technology businesses will be the real winners. The writer is chief executive of Tech City UK and UK business ambassador for digital industries.