By Tom Fairless And Sam Schechner 

BRUSSELS--Why doesn't Europe have its own Google or Facebook?

Many European policy makers say the region's homegrown Internet companies haven't made the big leagues at least in part because of a patchwork of tax, copyright and e-commerce rules that have stunted their growth. They also point to allegedly unfair business practices by U.S.-based competitors.

On Wednesday, the European Union tackled both issues, unveiling a plan to unify Europe's fragmented digital market and crack down on potential abuses of market power by U.S. Web giants.

The plan calls for an overhaul of EU telecommunications rules, reconciling tax and copyright rules within the 28-nation bloc, and simplifying regulations for companies that sell goods or send data across European borders.

One key goal, the EU said, is to help European consumers shop online in other EU countries as easily as in their home countries, and to get the best products at the best prices.

Jean-Claude Juncker, president of the European Commission, the EU's executive arm, said the plan would "lay the groundwork for Europe's digital future." "I want to see pan-continental telecoms networks, digital services that cross borders and a wave of innovative European startups," he said.

At the heart of the project is Europe's battle against the dominance of U.S.-based Web companies. The plan calls for several major inquiries into possible abuses by U.S. companies, including a "comprehensive analysis" of the role of online platforms such as search engines and price-comparison websites, and a previously signaled investigation by antitrust regulators into whether e-commerce companies such as Amazon.com Inc. are restricting cross-border trade.

U.S. tech companies are gearing up to fight the initiative. "Imposing regulatory barriers would be a grave mistake for Europe, and would have harmful effects on trans-Atlantic trade and investment," said Dean Garfield, head of the Information Technology Industry Council, a Washington-based trade group that includes Google Inc., Facebook Inc. and Microsoft Corp.

Amazon said Wednesday that it has long supported cross-border trade, and that its European-based sellers on its marketplace enjoyed more than EUR2.8 billion ($3.12 billion) in cross-border sales within Europe last year.

Companies on both sides of the Atlantic generally support the move toward a single online market. Antony Walker, deputy chief executive of TechUK, a lobbying group for British tech companies, said his group supported proposals to eliminate barriers to cross-border trade, but he warned against "new barriers being erected."

A single digital market "is a big deal" that "will add tremendously to [Europe's] competitiveness in the long term," General Electric Co. Chief Executive Jeffrey Immelt said in a speech Tuesday in Brussels. "No serious investor believes Europe really cares about jobs if the rules are inconsistent," he said.

But a single digital market is a long way from becoming reality. The commission must turn them into concrete legislative proposals that will be debated and modified by national governments and the European Parliament, a process that usually takes years.

It has taken Europe several decades to build a unified market for goods and services, and it has done so in a piecemeal way, with some plans falling by the wayside.

The proposed antitrust probes, by contrast, don't depend on new legislation.

The legal landscape is already shifting in response to European fears that big U.S. tech firms have become too dominant. National regulators in the Netherlands, Spain and other countries are investigating Facebook's privacy practices. The EU's antitrust regulator, meanwhile, has filed formal charges against Google alleging it has abused its dominance as a search engine to promote its own businesses.

Google denies the allegations, and says it faces fierce competition in a fast-changing marketplace. Facebook says that it follows European data-protection rules and has been repeatedly audited by the data protection authority in Ireland, home of its European headquarters.

Among the most controversial of Wednesday's proposals is one to better fight "illegal content on the Internet."

Under the EU's current rules, tech companies must comply with valid requests from governments and copyright holders to take down copyrighted material, but the companies generally aren't liable for content to which they haven't been alerted.

In the changes being considered as part of the new plan, the EU could require "Internet intermediary services" to monitor their systems for illicit content--something tech executives say could have a chilling effect on free speech.

While the plans stop short of new regulations for Internet companies, Günther Oettinger, the EU's digital commissioner, stressed that the option was still on the table, including those on the way companies handle illicit content.

Technology firms cautioned against heavy-handed new rules, which they said could constrain Europe's ability to attract technology companies and to develop its own.

"Some of these proposals take on real problems, but others also take on perceived problems where there is very little evidence base," said James Waterworth, head of the European office for Computer & Communications Industry Association, a U.S.-based trade group, adding that regulation of big internet platforms is "ill conceived."

Europe's telecom operators welcomed the plan. "We commend the [EU] for its commitment to ensure fair competition and a level playing field," said Britain's Vodafone Group PLC said. But it called for "a more ambitious timetable," and urged regulators to allow more mergers between telecom operators.

Write to Tom Fairless at tom.fairless@wsj.com

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