Comment & Opinion

Is EU Commissioner Ansip Europe's last hope for future Minecrafts and Mojangs?

Looking for a coherent regulatory framework

Is EU Commissioner Ansip Europe's last hope for future Minecrafts and Mojangs?

Jari-Pekka Kaleva (pictured) is the COO of European Games Developer Federation (EGDF) and the Senior Policy Analyst in Neogames, the hub of the Finnish game industry.

Minecraft is one of the most iconic success stories of the European games industry.

In only five years, the irresistible dream of an uncompromising game developer turned into an outstanding critical and commercial success.

Success stories of this kind are precisely what European Union is looking for to boost growth in our continent.

Up to 97% of the revenue generated by online games like Minecraft stays in the hands of the European developer.

On mobile side, the developer usually gets only 70%. In console game retail markets, the share of the developer is often less than 20%.

But are these success stories still possible?

The days of wild wild web are over

Since 2009, when Minecraft was launched, the global regulatory framework has become much more fragmented and it has made the legal barriers of entry to online markets higher than ever.

Countries all over the world are introducing their own adaptations of digital VAT, copyright, consumer protection and data protection frameworks.

What was once a free and unspoilt borderland of the wild wild web is now a major global market space bounded by regulatory barbed wire.

Thus a young talented online game developer, launching a game similar to Minecraft today, would have to think twice whether or not to launch a game as a standalone online game or through a distribution platform which would share the legal burden.

Will there be another European start-up to rival Minecraft develoepr Mojang?

Unfortunately, so far, many European regulatory actions have only fostered the market position of the mainly non-European distribution platforms, publishers and consulting companies - all of whom benefit from the increasing legal uncertainty.

Consequently, if we want to maximise digital growth in Europe, it is crucial that the Juncker Commission takes clear steps to secure the access to online markets for small and medium-sized enterprises (SMEs).

What is needed is a simple and consistent regulatory framework for the digital single market area.
Jari-Pekka Kaleva

Namely it means that Commission Vice-President Andrus Ansip has to succeed in his task of co-ordinating a new coherent regulatory framework for the digital single market area. Only a non-fragmented European digital single market can set a clear example for the rest of the World to follow.

Keep it simple, please

What the European digital single market area needs now is not just simplified VAT arrangements, harmonised consumer and contract rules or any other sector specific regulatory update. The upcoming digital single market strategy has to be more ambitious than that.

What is needed is a simple and consistent regulatory framework for the digital single market area.

It is the only way to avoid a situation where one potentially has to choose between breaking the VAT regulation by not collecting sufficient data on the location of consumers (and thus possibly face criminal charges of tax fraud), or breaking the data protection framework by collecting the aforementioned information (and possibly face a fine up to €100 million or up to 5% of global turnover).

Brussels is not the problem, member states are

Ansip's biggest challenge isn't in Brussels, where he has to co-ordinate the regulatory activities of Directorate-General Justice and Consumers with respect to consumer protection and data protection, DG Connect for copyright regulation, and DG Taxation and Customs Union for the VAT.

His biggest challenge is on a member state level, where each branch of government is implementing these regulatory frameworks from their own perspective without a clear overview.

As long as Member States do not have digital minister with similar responsibilities as Ansip, it is crucial that the European co-ordination of the national implementation of digital regulation is strengthened.

It is not enough to just increase the co-ordination under Fiscalis on VAT, Art. 29 WP on data protection or CPC Network on consumer protection. We need more co-ordination between those bodies as well.

1 regulatory framework or 28 national fragments

In the end, this means that national tax authorities, data protection authorities and consumer protection authorities have to have sufficient resources for both international co-operation and supporting their local digital industries.

On the European level, this means that the Commission Vice-President Jyrki Katainen should secure that structural reforms in EU countries do not break the single market area by allocating insufficient funding for the implementation of the European regulation.

In the worst case, the national authorities do not have resources for acquiring sector specific knowledge on industry practices, helping industry to implement the regulation or co-ordinating their approaches on the European level.

This would only lead to a business environment where expensive legal battles in administrative courts are the only way to obtain guidance on how the regulatory framework actually works.

From tax competition to service competition

Many policy makers call for less red tape for business. In principle they are correct. However, as digital markets are global, also the efforts to cut red tape should be global.

The European Union should actively advance global agreements fighting legal fragmentation.
Jari-Pekka Kaleva

Consequently, the European Union should actively advance global agreements fighting legal fragmentation.

On the other hand, for years, the European taxation framework has been tailored to reduce harmful tax competition in the single market area. This is slowly shifting the focus from tax competition to competition on the best public services for companies, not just on the European level, but on global level as well.

The more a SME needs to invest in extremely expensive legal consulting services in order to access the markets, the more crucial are well-functioning public services limiting these costs.

This means that there is more and more pressure in member states to broaden the focus of their industry specific support measures from helping with the implementation of the local legal framework to helping with the European and global one.

Due to fact that smaller member states have very limited embassy networks, it should be a task of the Commission to secure that all member states have an equal access to information required to help their companies to enter the global markets.

On the global digital markets there is room for everyone, so more European embassies co-operating in collecting information and disseminating it means more European wins.

Remember, in the end, Minecraft's developer Mojang was sold to Microsoft for $2.5 billion.

Will it be the last success story of its kind in Europe?

Good luck Andrus Ansip on ensuring it isn't.

PocketGamer.biz regularly posts content from a variety of guest writers across the games industry. These encompass a wide range of topics and people from different backgrounds and diversities, sharing their opinion on the hottest trending topics, undiscovered gems and what the future of the business holds.

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