The European Union is making a new set of rules that will guide the use of data in Europe. The EU commissioners said the move stems from the need to make Europe “No. 1 data continent”, and to check the excesses of American tech giants, Google and Facebook.

The use of personal data and online privacy have been a bone of contention between EU regulators and American tech companies; and now, the bloc wants stricter rules to curb abusive use of private data and anti-competitive practices.

EU Internal Market Commissioner Thierry Breton and the bloc’s executive Vice President Margrethe Vestager, have outlined plans on how Europe’s individuals, businesses and governing bodies could better handle data, according to DW.

But the aim of this move is more about making Europe the “No.1 data continent” that will square it up with China and the United States, than it is about curtailing American tech giants’ monopolistic practices.

The new regulatory rules will operate outside the 2016 EU data privacy laws, though it doesn’t replace the old rules which would be consulted for data sharing when there is need. In a sense, it will serve as alternative model.

Breton and Vestager shed light on how the new model will function. The bloc will create “European data spaces” where businesses, governments and researchers could store and access “protected” information.

That concept anchored in an EU Digital Governance Act would be followed by a Digital Services Act (DSA) and a Digital Market Act (DMA).

Vestager wants the DSA to use designated platforms to report hate speech and counterfeit produce to European regulators and remove it. He said the framework will offer an alternative model to those operated by big tech platforms, adding that the giants would be required to disclose their algorithms used to recommend online content.

Breton said the Europe’s novel Digital Market Act would via quantitative and qualitative rules seek to curb unfair behavior by internet giants, and many small and middle sized companies will benefit.

While the new rules will significantly change existing protocols, Breton said the EU would comply with the rules of the World Trade Organization (WTO), though there is going to be strict measures of enforcement.

“To ensure that data can circulate, we need to have rules, which will build trust and confidence,” he said. Adding that there will be sanctions, but forcing offenders into “structural separation” will be a last resort.

As part of the new rules, big tech companies seeking acquisition might also be required to inform the European Commission of their intentions, said Breton.

The EU Commission estimates that the new internet rules, if implemented, could increase the annual economic value of Europe’s data sharing from €7 billion ($8.3 billion) to about €11 billion by 2028. But the Commission admits that it could take up to two years to implement as it requires negotiations with individual EU states and the European Parliament.

Outside the EU, Britain is walking the same terrain to create new rules that will ensure competitiveness in the tech industry. The new regime, which will ensure that the monopolistic practices of Facebook and Google are curtailed, will kick off next year from a unit within the existing Competition and Markets Authority (CMA).

Britain’s Digital Secretary Oliver Dowden said there was a growing consensus that the concentration of power in a small number of companies was curtailing growth, reducing innovation and having negative impacts on the people and businesses that rely on them. He added that “it’s time to address that and unleash a new age of tech growth”.

Reuters reported that the newly created Digital Markets Unit, which is expected to start work in April, could be given powers to suspend, block and reverse decisions made by technology firms and to impose financial penalties for non-compliance.

The government said under the new unit, companies will have to be more transparent about how they use consumer data and restrictions that make it hard to use rival platforms will be banned. It added that the rules will also support the news industry, rebalancing the relationship between publishers and platforms.

Google, Facebook, Apple and Amazon have been on and off with governments in Europe, over antitrust concerns. Google and Facebook have been particularly caught in the web of government’s attention, as the push to get ahead in digital advertising is spurring the companies to breach private data rules.

The CMA said Google and Facebook dominate digital advertising, accounting for around 80% of 14 billion pounds spent in Britain in 2019.

But the companies said they are ready to work with the British government and digital regulators on advertising, to give users more control of their data and the ads they are served.

Emerging markets and developing economies grew consistently in the two decades before the COVID-19 pandemic hit, allowing for much-needed gains in poverty reduction and life expectancy. The crisis now puts much of that progress at risk while further widening the gap between rich and poor.

Despite the pre-pandemic gains in poverty reduction and lifespans, many of these countries have struggled to reduce income inequality. At the same time, they saw persistently high shares of inactive youth (i.e., those not in employment, education, or training), wide inequality in education, and large gaps remaining in economic opportunities for women. COVID-19 is expected to make inequality even worse than past crises since measures to contain the pandemic have had disproportionate effects on vulnerable workers and women.

As part of our latest World Economic Outlook we explore two facts about the current pandemic to estimate its effect on inequality: a person’s ability to work from home and the drop in GDP expected for most countries in the world.

The impact of where you work

First, the ability to work from home has been key during the pandemic. A recent IMF study shows that the ability to work from home is lower among low-income workers than for high-income earners. Based on data from the United States, we know that sectors with activities more likely to be performed from home saw a smaller reduction in employment. These two facts combined tell us that lower-income workers were less likely to be able to work from home and more likely to lose their jobs as a result of the pandemic, which would worsen the income distribution.

Second, we use the IMF’s GDP growth projections for 2020 as a proxy for what the aggregate decrease in income will be. We distribute this loss across income brackets in proportion to their ability to work from home. With this new income distribution, we compute a post-COVID summary measure of income distribution (Gini coefficient) for 2020 for 106 countries and compute the percent change. The higher the Gini coefficient, the greater the inequality, with high-income individuals receiving much larger percentages of the total income of the population.

What this tells us is the estimated effect from COVID-19 on the income distribution is much larger than that of past pandemics. It also provides evidence that the gains for emerging market economies and low-income developing countries achieved since the global financial crisis could be reversed. The analysis shows that the average Gini coefficient for emerging market and developing economies will rise to 42.7, which is comparable to the level in 2008. The impact would be larger for low-income developing countries despite slower progress since 2008.

Welfare will suffer

This widening inequality on average has a clear impact on people’s well-being. We assess the progress made before the pandemic and what we can expect for 2020 in terms of welfare using a measure that goes beyond GDP. We use a welfare measure that combines information on consumption growth, life expectancy, leisure time, and consumption inequality. Based on these measures, from 2002 to 2019, emerging markets and developing economies enjoyed welfare growth of almost 6 percent, which is 1.3 percentage points higher than per capita real GDP growth, suggesting many aspects of peoples’ lives were seeing improvement. The increase was mostly due to improvements in life expectancy.

The pandemic could reduce welfare by 8 percent in emerging markets and developing countries with more than half of it stemming from the excess change in inequality as a result of a person’s ability to work from home. Note that these estimates do not reflect any income redistribution measures after the pandemic. This means that countries can dampen the effect on inequality and on welfare more generally by policy actions.

What can we do about it?

In our latest World Economic Outlook, we outlined some policies and measures to support affected people and firms that will be essential for keeping the inequality gap from widening further.

Investment in retraining and reskilling programs can boost reemployment prospects for adaptable workers whose job duties may see long-term changes as a result of the pandemic. Meanwhile, expanding access to the internet and promoting financial inclusion will be important for an increasingly digital world of work.

Relaxing eligibility criteria for unemployment insurance and extending paid family and sick leave can also cushion the impact the crisis is having on jobs. Social assistance in the form of conditional cash transfers, food stamps, and nutrition and medical benefits for low-income households must not be withdrawn prematurely.

Policies to prevent decades of hard-won gains from being lost will be critical to ensuring a more equitable and prosperous future beyond the crisis.