How can Europe make the most of its digital opportunities?

I once asked a conference of would-be digital entrepreneurs, “Who wants to change the world?” Predictably, every hand went up. Then I asked, “Who thinks the world wants to be changed?” This time, only a few hands were raised.

That’s the thing about digital technology: it’s a massive force for change. But while people might say they want change, they do not always want to be changed.

Digital technology brings us many wonderful things. If that was not the case, we would not buy it and use it to make our lives better. But it also raises many challenges for society to work through. Some are clearly malign, like cyber-attacks, hate speech and fake news. And some are more systemic: digital is overturning the way we work, and like other technological changes, this can leave a few people worse off.

The European Union is attempting to get to grips with the phenomenon through its Digital Single Market (DSM) strategy, which aims to make the most of the opportunities for people and businesses. The European Commission claims that a “fully functional Digital Single Market” could add €415 billion per year to the EU’s economy and create hundreds of thousands of new jobs. On May 10, it published a mid-term review of its activities, revealing the state of its many proposals to promote European digital businesses.

What should we expect from the EU in this digital revolution? The EU’s relevance in this area comes from two of its core strengths. Firstly, the single market, with its common rules, free trade and open borders. Secondly, the acquis communautaire, or body of accumulated EU legislation. The Commission has a wide range of tools to help guide Europeans, and the DSM strategy contains many different initiatives to remove barriers to trade. The strategy says its ultimate objective is the creation of jobs and growth. But by this measure, it has not yet been a success.

Why not? The main reason for its weak impact is that the focus of the DSM got lost, and other goals muscled in. Consumers were thought to need more protection in the digital environment, which meant choking off market opportunities. Many of the proposals simply raise questions about how they can possibly help build the DSM. For example, is the EU likely to create more jobs by setting up complex and unnecessary arrangements for consumers to retrieve the data which they have willingly given to digital service providers? And how will the proposals for more and overlapping data privacy requirements in the new ePrivacy directive help build growth?

By contrast, one obvious boost to growth and jobs would be to grow the numbers of EU consumers who buy online from another member state from its current 15% figure to match the 44% of those who only buy online in their own country. On this score, the DSM strategy is lacking.

Protectionist sentiments rarely lead to good policy. Politicians are often persuaded that some sectors, like publishing, need to be safeguarded against digitally induced change. But these protections disadvantage European consumers, who want the choices and ease of access that digital brings. The effect is that they stunt growth and jobs. Likewise, EU member states have taken such a cautious approach to the single market in areas like spectrum allocation that it might be described as Augustinian: yes please, but not yet. Under the digital spotlight, this reluctance to sacrifice national interests for the sake of a bigger, single European market becomes even more damaging.

Yet the EU already has tools to make a difference. Europe’s acquis has spin-off benefits, and for many member states, EU initiatives show the way: witness how member states have followed the Commission’s lead in addressing the digital skills gaps. And almost every member state has some variant of a plan for Industry 4.0, a strategy for accelerating the digitisation and automation of its industries and enterprises. The message is clear: re-focus the DSM on jobs and growth, resist calls to dilute it, and make sure the member states and EU institutions are tightly aligned.

Perhaps the recent wave of cyber-attacks will prompt Europe to rethink its approach. The latest virus hit 150 countries in just two days, forcefully demonstrating the global nature of digital. If cybercrime knows no borders, we cannot fight it from inside national fortresses. The EU needs to think bigger and smarter. In a changing world, we must be willing to change ourselves too.

Words  John Higgins
Photo  Shutterstock

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