The European Commission’s strategy for “digitizing” industry that was unveiled today is a good step in the right direction. The digital industry will play its part but we need a business and policy environment that maximises our chances to take advantage of this opportunity.
In the build-up to last May’s unveiling of the Digital Single Market (DSM) strategy DIGITALEUROPE urged the European Commission to focus its efforts on preparing Europe’s economy for the digital transformation. This week’s package of initiatives does just that.
We are getting to the meat of the DSM, and not a minute too soon. Last month at our Masters of Digital event the final panel discussion involved speakers from agriculture, auto manufacturing and financial services, talking about how digital technology is already redefining their industries.
Just three years ago discussions about how drones and automated tractors can improve farmers’ efficiency, how 3D-printed car parts can help build cars tailored to local market conditions, or how a phone could replace a bank card would have sounded like science fiction. It involves science but it’s not fiction.
These are a few examples of how the digital transformation is already underway.
The technology package of initiatives unveiled today correctly identifies some of the core elements of the digital transformation.
And contrary to what some feared, it isn’t a rush to regulate. Instead, there are some pragmatic suggestions how Europe should make better use of the technologies on offer. Innovation in the areas of high-performance computing and cloud needs to be encouraged in an inclusive way.
The proposed “innovation hubs” are an excellent idea. To be truly effective they will need to be embraced by Europe’s business community. We’ve seen really great examples of this in some of Europe’s leading cities.
The focus on developing digital skills is also to be welcomed. It is important to ramp up efforts to ensure Europe has the digital skills we need to make the most of the digital opportunities. I would add that policy makers and educators themselves need training to appreciate the impact of new technologies.
The inclusive approach seen in the cloud initiative is also evident in the approach to ICT standardisation laid out by the Commission, with its emphasis on collaboration between public and private sectors. We have a unique opportunity to master digital for the benefit of all Europeans.
The digital industry will play its part but we need a business and policy environment that maximises our chances to take advantage of this opportunity. This week’s announcements by the Commission are a good step in the right direction.
DIGITALEUROPE wants two things for Europe; first, for us to get the best from digital – to have strong productive economies, efficient public services and citizens enjoying digital technologies as part of their daily lives.
And second we want Europe to be a great place for the digital sector – including DIGITALEUROPE’s members – to thrive and grow. Put simply – ours is a vision of a Europe that has mastered digital.
We see around us everyday the great promise that digital technology offers. We watch the transformation of great European businesses. We hear about new tech, and tech-driven businesses growing and thriving, and we see the increasing attractiveness of many European cities and regions to investors.
But are we doing enough to harness the potential of digital technologies?
DIGITALEUROPE measures the DSM elements against a set of principles we think are pre-requisites to achieving our vision – the masters of digital vision. They include the following:
– Does the initiative take us towards a single market fit for the digital age? Does it break down national silos?
– Will it encourage innovation and entrepreneurship?
– Is the initiative simply shielding the status quo from change? For example, by protecting an incumbent industry or national icon, or trying to protect jobs threatened by technological progress or just new fair competition?
– Are new rules really needed or could existing rules be used more effectively? And if they are needed have the policymakers designed them in the least burdensome, and most straightforward way possible?
– Does the initiative recognise the global nature of digital? If so will it encourage European companies and citizens to want access to products, services and customers from around the globe? And will it allow European businesses to take advantage of a global approach to standards?
– Finally, and most important of all, will the DSM encourage economic growth and the creation of good quality European jobs?
This week’s announcements appear to uphold these principles. The emphasis on collaboration with industry that runs through all the separate elements of the technology package bodes well for Europe’s on-going digital transformation, and its ability to boost growth and create jobs in the digital age.
Picture credits: Lukas Budimaier
On Tuesday European Parliament will vote its position on the Digital Market Strategy (DSM). The raportuer for the text, MEP Kaja Kallas, explains what the legislative assembly is asking the Commission: i.e. more pro-innovation policies, more support to the sharing economy, less digital portectionism.
The Digital Post: What are the main requests laid out in the EP position on the DSM?
Kaja Kallas: The most important aspect of this report is its overarching strong support for innovation- friendly policies and its pro-innovation tone, especially with regard to online platforms. To point out some more specific paragraphs, I would emphasize the digital transformation plan and the big data review which aims to remove barriers to promote innovation in the data driven sector.
TDP: What are the actions, if any, stated in the DSM that the EP would like to be tweaked or on which it has some doubts?
KK: The EP report is sceptical of the Commission’s approach when it comes to platforms and is somewhat critical of the consultation which had leading questions in it. We are not sure if the outcome is the result of open questions or whether it is based on the ones that were a bit leading.
The EP’s report clarifies things that the DSM strategy does not. For example, it is clearly against consolidation in the telecoms sector. Also, the once only principle to be applied in public administration (so not just a pilot project) is brought in, and it goes beyond the strategy on things that we felt were necessary to cover in the report (sharing economy and the digital transformation of the industry for instance).
TDP: How the EP position is supporting sharing economy, as you have stated?
KK: The report shows strong support for the sharing economy and calls for the removal of artificial barriers which hinder its growth. This will enable us to reap the benefits of the digital market and create new opportunities for businesses, citizens, public bodies and consumers.
The report even states that employment laws should be updated to allow new flexible forms of employment to emerge.
TDP: What do you think of the approach of the Commission as regards online platforms?
KK: The consultation launched by the Commission seems to have been more focused on calming down the voices in some member states asking for protectionist measures against American companies.
There is nothing wrong with investigating whether there are problems, but the questions we pose should be open ended and aimed at really understanding the problems. This should not be about protectionism.
photo credit: Dan Mason
If the latest leaked version is a good indication of where things will come out, there are serious grounds for optimism about the Juncker Commission’s Digital Single Market
As a Brussels veteran, it is tempting to lapse into cynicism when confronted with a new Commission’s policy programme. Recent Commissions have often re-packaged existing policy initiatives and added generous doses of jargon and waffle, guaranteeing under-delivery.
But if the latest leaked version is a good indication of where things will come out, there are serious grounds for optimism about the Juncker Commission’s Digital Single Market strategy.
There are several reasons for this:
First, the Commission’s starting point is exactly right.
In striking an optimistic tone that is positive about Europe’s strengths, assets, and potential (“Europe has the assets to succeed in this global digital economy”), the Commission is allowing space for a shift in mind-set for the many decision makers who have been tempted to associate Europe’s digital prospects with doom and gloom.
It seems to be rejecting the politics of despair and defensive policy options that would simply guarantee Europe’s future as a consumer and importer of foreign digital services and technologies, rather than a producer and exporter – a follower rather than a leader.
Second, the Commission understands the barriers and challenges.
There has been a considerable amount of consultation, both formal and informal, and it looks like the Commission understands many of the key barriers to the digitalisation of the European economy.
It’s very important that the resulting policy initiatives stay focused on achieving the objectives of the DSM, rather than developing some kind of independent existence, or carrying on because they respond to political pressure from one or other interest group.
Just as importantly, it seems to be clear about the landscape of competing interests and to have an idea of where it wants to come out in terms of some of the big debates.
In other words, it looks like there is political will to tackle strong opposition from vested interests. It is to be hoped that this level of ambition can be matched by the Member States and the Parliament – no small challenge in a time of such economic uncertainty.
Third, the Commission understands the importance of evidence and problem definitions.
It’s too often been the case that the Commission has brought together stakeholders to discuss and find solutions to “problems” that are not clearly identified or proven.
This strategy has a welcome emphasis on tackling actual, rather than perceived, problems. It’s good to see that on some of the vaguer concepts like “platform regulation”, it is intending to deepen its understanding of the problems by consulting, and indeed via a sector enquiry.
This is obviously the direction that policy making must take. But it will not only be challenging for the policy makers. It will be just as tough for industry and civil society, which have relied on silver-tongued lobbyists in Brussels for decades.
Fourth, the Commission wants to integrate enforcement of existing rules with the development of new ones.
The launch of the DSM is an early test of the effectiveness of the new Commission structure and working method. Many of the key drivers in the policy debate on the DSM relate to competition and consumer protection.
In deliberately launching both open consultations and formal tools like the proposed e-commerce sector enquiry – policy responsibilities that are held by different Directorates-General, the Commission seems to be delivering on its promise to improve coordination in policy making. The debate on “platform regulation” is the best example.
Although there is considerable political pressure from Paris, Berlin, and Madrid to “do something” about “GAFA” (the playful French acronym for Google, Amazon, Facebook, and Apple), the Commission is rightly giving itself the chance to prove its executive and enforcement credentials, notably in the antitrust area.
Apart from the crucial tests that the Google cases constitute, DG COMP will be given an important opportunity to reinforce its position as the world’s leading antitrust regulator through the launch of a sector enquiry on e-commerce.
This position is one of the biggest achievements of the European Union writ large, and without it, the European project would lose a significant amount of respect among Europeans.
And of course, it’s very important to develop strong ex post enforcement capabilities if the Commission is serious about becoming a modern and digital-friendly government institution. This is because digital markets are so fast-moving that traditional, long-winded legislative processes will no longer be adequate to regulate with.
1. As noted above, the Commission’s starting point is excellent. However, it could go even further and embrace the concept of digital disruption and the value it provides, while noting some of the attendant challenges. The primary source of opposition to a pro-digital agenda like the DSM will come from disrupted industries, and it is important for the Commission to nail its colours to the mast from the start by laying down a challenge to them to modernise.
2. As it prepares a final version of the DSM strategy, we would urge the Commission to consider being explicit about which anti-competitive or anti-digital practices it is targeting, where these have been identified. One example would be some of the specific ways that big brands segment the Internal Market along national lines in order to control prices, to the detriment of SMEs, competition, consumer welfare, and the potential of the DSM. This is not to say that the Commission has to spell out all of its policy plans in detail, especially where these are not yet fully formed or where the evidence base is still missing (e.g. platform regulation). However, where the targets are already clearly defined, the pressure exerted by publicly “outing” them will go a long way. Another excellent reason to take this approach is that it will contribute to a more straight-talking tone. This is preferable to the usual euro-speak because it sounds more honest and dynamic, and because it’s obviously more measurable.
3. It would also be helpful to couple the regulatory agenda with a more explicit de-regulatory push. This is certainly present in the leaked draft, but could be emphasised more clearly. The benefit of emphasising the de-regulatory agenda is that it will provide the carrot that some industry actors need in order to engage more constructively than they might otherwise. Good examples that can be more explicitly enumerated could include the ePrivacy Directive and other rules that apply to the telecoms sector (on SMS, for example, since that will soon be completely overtaken by other messaging services), or aspects of the Audiovisual Media Services Directive, which also contains outdated provisions.
4. Linked to this is the need to take a much closer look at legislative initiatives that are already underway. In particular, versions of the Data Protection Regulation, the Network and Information Security Directive, and the Payments Services Directive being debated by the Parliament or the Council each contain provisions that could seriously undermine the objectives of the DSM. These could be addressed by carrying out impact assessments of texts adopted by one or both legislative institutions.
5. When promoting an investment agenda, the Commission would do well to ensure that investment is promoted up and down the value chain, and not just in infrastructure. This is important because applications and services drive the demand for capacity that is capable of raising consumers’ willingness to pay for Internet access. Too often, telecoms companies have been allowed to get away unchallenged with passing the message that net neutrality is somehow inimical to investment in infrastructure, when the opposite is likely to be the case.