Rule Making in the Digital Economy: Overcoming Functional Equivalence as a Regulatory Principle in the EU

The article analyses how the EU regulates the Internet on the content (e-commerce, audio-video media services) and the carrier (telecoms networks and services) layers and argues that modern EU Internet regulation is fundamentally based on the principle of functional equivalence or regulating functionally similar services alike. As new and disruptive services emerge, the laws are consistently adjusted but not fundamentally changed. The “like should be regulated alike” adage causes the new innovative and disruptive services to be subjected to small and incremental regulatory changes rather than the necessary complete remodelling. Furthermore, it opens up for surprising lobbying patterns as incumbents push for legacy laws to be applied to disruptive new services. The article then argues that a complete remodelling of the approach might be necessary to increase innovation and maximise benefits that disruptive technologies offer.