EIT Digital welcomes the European Commission’s latest digital initiatives, saying it is the next step in creating a innovative and competitive digital Europe.
The presentation of the new European regulatory framework for digital is a next step in the journey to foster innovation and competitiveness of the European online environment. Although it is mandatory to create an equal playing field, this needs to be complemented by strengthening the environment in Europe that facilitates the creation of European digital world players that will populate this playing field.
In digital, 10 years a lifetime! During this decade, digital has contributed to society by enhancing global connectivity, enabling a data-driven new economy, and providing instant information access wherever we are. But digital technology presents us with challenges too, like privacy concerns, information distortion, and dominance of Big Tech.
It has become increasingly clear that something needs to be done to address these challenges, ensure that consumers are protected and create a level playing field. We therefore welcome the European Commission’s latest initiatives. The Digital Governance Act, the Digital Markets Act, and the Digital Services Act can become important tools to strengthen data sharing mechanisms across the EU, open the digital market for new entrants, and to address the concerns around dominant platforms.
Regulation alone is, however, not enough to strengthen the Single Market for digital services and foster innovation and competitiveness of the European online environment. New policy measures require affected companies to adapt. And, ironically enough, the more comprehensive and thus complicated regulation becomes, the more it favours the big players and their capacity to adjust.
There are also indications that GDPR, as welcome as it is, is largely beneficial to big platforms that are quickly able to adjust to the new reality. In this light, one needs to carefully evaluate whether a new regulation is really needed. The issue of market dominance is of course not only an issue in the digital world: in any market, regulators must prevent the establishment of monopolies or oligopolies that hinder new players from entering the market. Hence, to address market dominance of digital platforms, existing approaches of breaking up these platforms could also be considered. This, of course, requires a clear definition of digital markets and digital market dominance.
Regulation and innovation do not necessarily go hand in hand. Innovation is often about challenging and disrupting the status quo, including exiting business models as well as existing regulation. Regulation should be carefully constructed in order to stimulate innovation by focussing on the transition to the target, rather than regulating the current state. Obviously, this requires a thorough understanding of what the target constitutes.
In the case of strengthening digital Europe, this brings us to the aspect of word-class European digital players. Regulation is only one element in building a strong digital Europe. Looking at the main actors in the digital sector, unfortunately we observe that there is underrepresentation of European players. Especially during the last decade, the European position in digital was weakened by new actors from outside Europe entering the market and taking leading positions.
Therefore, equal if not bigger efforts will be needed to stimulate the creation of European digital champions that are capable to compete with existing dominant players. Although serious progress has been made towards strengthening and streamlining the innovation ecosystems in Europe, significantly more needs to be done when it comes to investment capital, creation of the single European domestic market, investment in digital talent, as well as connecting the European research and innovation communities. All of these are areas where Europe is currently still outperformed by its global competitors.
To strengthen digital Europe, we need a combined approach of regulatory measures and of instruments fostering the establishment of a competitive European digital industry that can build on a sound regulatory framework, establishing a sovereign digital Europe representing our European values like inclusiveness, fairness, and sustainability. This requires makers (European industry) and shapers (European regulators) to work hand in hand in the construction of a strong digital Europe.