NEW YORK (TheStreet) -- Unveiled on Wednesday, the European Commission's Single Digital Market strategy is supposed to help create a unified market for technology services and products in Europe by simplifying regulations.Warren Buffett's 7 Secrets to Dividend Investing Revealed
"This is the European Commission using regulation to take shots at American companies," said Daniel Castro, vice president at Information Technology and Innovation Foundation, a Washington-based public policy think tank.
According to Castro, the European Commission is applying old solutions (more regulations) to solve new problems related to technology. "This is a backward way of looking at problems," he says.
With 19.2% of the world's total Internet users and approximately 70% penetration rates for its total population, the European market is a large and lucrative one for technology companies.
But an assortment of regulations and copyright laws has also made it a relatively difficult and differentiated one for local businesses.
For example, geo-blocking, or the practice of barring content between member states due to copyright issues, limits growth and revenue-earning potential for local Web sites.
Similarly, local telecommunications companies have to abide with multiple regulations that over-the-top messaging services, such as Facebook's WhatsApp, bypass.
The EU's latest strategy document provides a uniform set of policy frameworks across member states.
"Creating a Digital Single Market will have a direct impact on employment and economic growth for the EU from manufacturing and retail consumers to health and public services," said Mark Skilton, a management professor at Warwick Business School.
At the same time, however, the regulations also provide the European Commission with the tools to restrict U.S. technology companies, which dominate the Internet ecosystem.
In its strategy document, the European Commission stated that it would analyze the role of online platforms (such as search engines, social media and app stores) in the new market and review its privacy directives to ensure that dominant online platforms do not abuse their powers.
The operations of U.S. technology companies such as Google, Facebook and Amazon (AMZN) could be affected by these initiatives. These companies use consumer data (in the form of targeted advertising or recommendation engines) to power their services.
According to Castro, the proposed scrutiny of privacy rules could end up creating a two-tier market in Europe, with one set of rules for local firms and another for external competitors. He said the the EU's actions amount to creating a "digital European fortress," which does not "allow European data outside Europe."