Europe quietly took a giant step forward last week, moving a bit closer to the goal of letting consumers shop online without borders. In a reversal of its previous stance, the European Commission announced that it is softening its position on who has the legal authority to govern international e-commerce disputes.
The move has to do with pre-legislative doctrine on the matter called “Rome II,” which would ultimately have become the European Union’s law dictating that consumer e-commerce disputes must be strictly governed by the country in which the consumer lives.
Therefore, if a French resident makes a major purchase from a U.S-based Web site, and then has a problem with the merchandise or the company, French law would determine how the dispute is settled.
Rome II, if enacted as is, has the potential to stunt the growth of international e-commerce. We are talking about stunting the growth in a way unlike any other issue from tax debates to security glitches.
On the other hand, last week’s move by the European Commission could be the first sign that the Internet’s early promise to make the world a much smaller community may someday be fulfilled.
How the Rome II drama will ultimately play out remains to be seen, but there is a severe disconnect between the European Commission’s previous hard-line approach to consumer protection on the national level and the business world’s aggressive approach to international e-commerce.
Just last week, for example, Napster, the embattled online music service, announced it had signed licensing deals with more than 150 independent music companies across Europe as part of the subscription service it will launch shortly.
Napster is one of a number of U.S.-based companies determined to expand operations and presence throughout the world, particularly in Europe, where e-commerce is growing at breakneck speed.
Business leaders continue to demonstrate their understanding that it is necessary to blur borders when conducting business via the Net.
Wired Across the Pond
Earlier this year, the European Commission reported that the number of households in Europe connected to the Internet had increased by 55 percent in a six-month period last year. The Commission estimated that Europe now has more users than the United States.
That has much to do with the fact that last year Internet access fees in Europe dropped by about 23 percent, according to the Commission.
Meanwhile, research from multiple sources indicates that although most Europeans are still using the Internet for content and information, shopping is on the upswing, and certain industries, such as online travel booking, have caught on with wired Europeans.
The Net advertising business, struggling in America, is actually beginning to thrive in European countries.
Drawing From the Well
Rapid growth in the European Internet market is all the more reason that the U.S. will benefit by the Commission’s signal that it may be willing to loosen its stance on the regulation of cross-border disputes.
The burgeoning consumer market in European countries could be just what American e-commerce companies need to recover from the past year of online economic drought.
While American e-commerce has remained somewhat sluggish and suffered the much-talked about dot-com shakeout, European businesses have taken a more conservative approach. While growth has been slower there, it is now poised to take off.
The Race Is On
Rather than being stymied by potential international consumer laws, it would be to America’s advantage for e-commerce to establish itself as a borderless entity.
What if European companies were to use this downtime in American e-commerce to their advantage and in short order take the lead in international online business, leaving the U.S. in the commercial dust?
That is not beyond the realm of possibility. Some industry observers believe European companies are learning from the mistakes of American e-commerce companies, and taking steps to become the commanding presence in consumer e-commerce.
On the Road
Still, whether Rome II becomes a footnote in the e-commerce history book or not, some cultural differences may indeed get in the way of online businesses.
Yahoo!, for example, is still dealing with the issue of offensive content on its auction sites.
When anti-racism groups sued Yahoo! in France last year for enabling French consumers to see Nazi-related material on its auction site, the suit brought into focus the role that ideological conflicts can play in commercial transactions.
In the U.S., there are as many free-speech advocacy groups as there are advocates of political correctness online. How do online companies craft policies that will appeal to the cultural value systems of various countries?
Chances are that as e-commerce continues to find its international legs, such conflicts will have to be approached one at a time. However, having a hard and fast rule that applies in every case as to which country controls online sales is probably not the way to encourage growth along the way.
Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.