From Market Liberalism to Public Intervention: Digital Sovereignty and Changing European Union Digital Single Market Governance

• Published date: 01 January 2024
• Author: Sebastian Heidebrecht
• Date: 01 January 2024
• DOI: http://doi.org/10.1111/jcms.13488

From Market Liberalism to Public Intervention: Digital

Sovereignty and Changing European Union Digital Single

Market Governance

SEBASTIAN HEIDEBRECHT

EIF Centre for European Integration Research, Institute of Political Science, University of Vienna, Wien

Abstract

Against the backdrop of the ever-increasing importance of digital services, the European Union

(EU) is promoting deepening of its digital single market (DSM). Whilst the single market has often

been portrayed as the Trojan horse of neoliberalism, recent rhetoric on digital sovereignty indicates

a desire for more control over the digital sphere. A historical case study of key elements of the

DSM, namely digital services regulation and data protection, shows that EU governance has be-

come less market-liberal and more public-interventionist. In response to challenges associated with

the digital economy, policy goals have been broadened to include further objectives in addition to

competitiveness. Stakeholders and public authorities rather than business actors have become more

important in governance processes, and more market-correcting instruments have been introduced.

These reforms have been made by adding more interventionist elements and also by redirecting the

role of the European Commission to overseeing very large online platforms.

Keywords: digital policy; institutions; public policy; single market/economic and monetary union

Introduction

The European Union’s (EU) single market has often been portrayed as nothing more than

a Trojan horse of neoliberalism plagued by a democratic def‌icit. However, recent rhetoric

by leading European politicians indicates a more interventionist approach in several pol-

icy areas. French President Emmanuel Macron sees a consensus emerging to strengthen

strategic autonomy, def‌ined as the ability to reduce industrial dependence vis-à-vis the

rest of the world, which is seen as aim number 1 by the President of the European Coun-

cil, Charles Michel (Tamma, 2020). Former German Chancellor Angela Merkel (2019)

embraced the term digital sovereignty, and the Internal Market Commissioner, Thierry

Breton (2020), has called for a concerted public effort to boost Europe’s capabilities in

key digital technologies. The President of the European Commission, Ursula von der

Leyen (2020), links her institution’s digital policy to the aim of pursuing digital sover-

eignty in order to preserve and promote EU values in a digitised world. Has EU gover-

nance become less market-liberal and more public-interventionist?

I focus on selected governance issues in the context of the EU’s comprehensive at-

tempt to create and deepen a European digital single market (DSM), particularly digital

service regulation and data protection. This article argues that the European Commis-

sion’s approach has indeed become more public-interventionist. This speaks to recent

f‌indings in adjacent areas that report substantial changes from important previous trends

like the rise of a European regulatory state (Majone, 1994), exhaustion of the welfare state

JCMS 2024 Volume 62. Number 1. pp. 205–223DOI: 10.1111/jcms.13488

© 2023 The Authors. JCMS: Journal of Common Market Studies published by University Association for Contemporary European Studies and John Wile y&Sons

Ltd.

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium,

provided the original work is properly cited.

(Lodge, 2008, p. 282) and a retreat of the interventionist state (Zohlnhöfer et al., 2018). In

trade policy, Schmitz and Seidl (2022) identify an emerging coalition that successfully

challenges Europe’s neoliberal bias. In energy policy, Siddi and Kustova (2021)f‌ind that

the EU is changing from being a liberal actor, in the sense of promoting free markets, to

being a more strategic actor willing to ‘sacrif‌ice’market principles to promote political

objectives.

In particular, I contribute to the emerging literature on EU digital policy by analysing

key elements of the DSM (Kalyanpur and Newman, 2019; Laurer and Seidl, 2021;

Newman, 2020) and to that on policy changes that are accompanying the EU’s new rhetoric

in terms of digital sovereignty and strategic autonomy (Bellanova et al., 2022;

Floridi, 2020; Pohle and Thiel, 2020; Schmitz and Seidl, 2022). I demonstrate that policy

aims have been broadened to include further objectives in addition to competitiveness.

Stakeholders and public authorities rather than business actors have become more impor-

tant in governance processes, and more market-correcting instruments have been

introduced.

Using a historical institutional theoretical model, I show that changes in key DSM gov-

ernance elements have occurred gradually as responses to economic, political and social

challenges that are associated with the digital economy. In the 2010s, attempts to create

more trust in the DSM resulted in more public authority, which, however, remained at

the level of the Member States. Building on experience with these structures in the area

of data protection, in the 2020s, the EU has added further public elements and redirected

the supranational powers of the European Commission, in particular over very large plat-

form companies.

In the light of crucial events, it is noteworthy that the Commission’s attempts at more

public-interventionist governance predate recent crises like the COVID-19 pandemic and

the Russian invasion of Ukraine. But these events undoubtedly provide EU digital

policy-making with more salience and raise questions about the role of digital sovereignty

in a more hostile geopolitical environment. Knowing whether and how the EU is chang-

ing its approach to governing the digital economy is essential to understand its role in the

digital age. Before I present my f‌indings, I provide a discussion on the development of

EU DSM policy in the light of existing literature, detail my theoretical argument and

elaborate on my empirical strategy. The last section concludes.

I.The EU DSM Policy and the Move to Digital Sovereignty

Political science research on digital policy has shown that the EU has aimed for a regula-

tory approach to internet governance that is somewhere between the United States’

laissez-faire approach and China’s state-controlled model (Hobbs, 2020). This was

ref‌lected in the creation of a DSM, which, according to the Commission, will ensure

the free movement of goods, persons, services and capital and will allow individuals

and businesses to seamlessly access and participate in online activities (European

Commission, 2015a, p. 3). Newman (2020) shows that the Commission has used a dual

approach combining policies that tend to be market-correcting, as in the area of consumer

protection, and ones that tend to be market-making, like eliminating obstacles that cause

market fragmentation. This puts the EU on a ‘unique path among advanced economies’

(Newman, 2020, p. 289).

Sebastian Heidebrecht206

© 2023 The Authors. JCMS: Journal of Common Market Studies published by University Association for Contemporary European Studies and John Wile y&Sons

Ltd.