Europe must regain its place as world leader in digital technology

Written by Markus J. Beyrer, Director General, BUSINESSEUROPE

“We cannot solve problems using the same kind of thinking we used when we created them.”

Albert Einstein.

Markus J Beyrer
Director-General
BUSINESSEUROPE (BUSINESSEUROPE)

Digital is affecting everything we know. It will change dramatically our lives and our economy. It will impact the way we produce, how we work, our approach to information, our contacts with public administration. All sectors will be concerned, not only manufacturing and trade, but also energy and transport, education and health.

Europe can either ride the wave of digital transformation, grasping the opportunities that it will offer, or miss the train and let our competitors make the most out of it, widening the gap that is already growing wider year after year.

There is unprecedented potential for Europe. By taking advantage of digital opportunities, our continent can not only regain competitiveness, but also speed up the journey to economic prosperity. Achieving a Digital Single Market could add 1.25 trillion euros of added value to Europe’s manufacturing industry by 2025, create 3.8 million skilled jobs and ensure that Europe regains its place as a world leader in information and communication technology.

Europe was a digital leader in the past. We invented the CD, the DVD, and the videotape. But now innovation is happening elsewhere. Ranked by annual revenues, 13 out of the 20 global internet companies are based in the US, four in China, two in Japan, one in South Korea and none in the EU. Conversely, just eight of the world’s top 100 high-tech companies have their headquarters in Europe and generate only a tenth of the industry’s global revenue.

To win in the digital economy and create value both for consumers and the society, companies will need an adequate business environment, which favours, and not hampers, digital transformation. The new Digital Single Market strategy must live up to these expectations. Europe must rethink its risk-opportunity balance and focus on the opportunities rather than on the threats of the digital economy.

First, the digital economy is largely based on the collection, process and analysis of data. The EU framework on data protection must therefore ensure not only that citizens’ personal data are protected, but also that collecting, analysing and transferring data does not become too burdensome and expensive for companies.

Second, Europe needs a robust infrastructure – this is the backbone of the digital economy. Ubiquitous high-speed networks are the key enabling technology for the full realisation of the so-called ‘Industrial Internet’. Competition and strong incentives for continued investment in the EU on broadband infrastructure will be essential to meet the exponential connectivity and quality demands associated to an Industrial Internet. Constant availability, reliable speeds and adequate capabilities of communication infrastructure are all crucial elements to avoid disruptions and downtime costs in fully automated processes.

Third, it is essential that consistent efforts are made towards the development of the skills needed to make the digital revolution a reality. There is a growing demand for highly specialised skills, such as Big Data analysts, as well as cyber-security and cloud-computing specialists. Business, academia, schools, government and organisations should work together to develop a high-level digital skills strategy that would also facilitate global talent mobility.

To conclude, policy makers must bear in mind that under a better regulation approach, any action should be aimed at decreasing regulation that is not needed, instead of adding new requirements. To have a more innovative Europe with a positive impact on growth and jobs, one should avoid creating new rules for every new innovative product or business model. At the same time, it is crucial to ensure that existing rules are effective, fast enough and properly enforced to meet the new challenges.

Interoperability, transparency, non-discrimination and consumer choice should be among the paramount principles for the digital economy of the future. Most issues can be solved with adequate application of existing rules. When considering actions targeting specific business models, it should be kept in mind that the consequences of new rules designed for targeting specific companies, sectors or business models will – in all likelihood – have broader and unintended spill-over effects into other companies and sectors, with a negative impact on growth and jobs.