It’s make-or-break time for Europe’s digital recovery

Alexander De Croo is Belgium’s Deputy Prime Minister and Minister of Digital Agenda

The Fourth Industrial Revolution is rapidly changing our society and our economy. No sector is exempt from the disruption driven by increased connectivity and ‘networkisation’. For Europe to lead in this new era, it needs to foster innovations and investments by creating an open, flexible and digital single market with a regulatory framework reflecting the dynamics of the digital economy. Let me put forward four necessary building blocks for Europe’s leadership in the Fourth Industrial Revolution: strong and solid networks, a true digital single market that boosts the digital economy for businesses and consumers, the promotion of digital skills and jobs and, finally, the importance of data-driven innovation.
The ‘Internet of Things’ will soon be the ‘Internet of Everything’, connecting all humans and things. Smart refrigerators or connected supply chains are just early examples. In the years to come, we will see innovative breakthroughs in a number of areas that have a direct and important impact on people’s lives such as cars, health, education and energy. Without state-of-the-art broadband networks capable of transferring huge amounts of data in no time, Europe will be unfit to unleash the full potential of the Fourth Industrial Revolution. An estimated €80bn of private-sector investments will be needed to make sure these networks reach everywhere in Europe. The EU should stimulate this process by stepping up efforts for a single market that encourages investments, competition and innovation in the fields of infrastructure and service delivery. In this regard, an in-depth review of the European framework for electronic communication and audio-visual media services should be undertaken.

For Europe to lead rather than simply participate in the new era, it will also need to boost the digital economy for businesses and consumers. One of our main ambitions should be to facilitate the emergence and growth of innovative start-ups, both creative SMEs and global digital players, through R&D policies favouring differentiated European project development processes and disruptive innovations. The EU should also unlock the potential of e-commerce by facilitating electronic and mobile payments, promoting online dispute resolution, and removing barriers to cross-border business for instance through a single system for VAT payments. In today’s world of e-commerce, it’s unfair and absurd to have price discrimination for parcel deliveries based on country of origin or destination within the European Union. Cross-border prices are currently an average of four-times more expensive than domestic prices. This is a major problem for European companies, in particular for SMEs and start-ups. The example of roaming charges has shown that, when inclined, the EU can tear down useless and counterproductive borders.

Online platforms are another area that will be critical for the future of Europe’s digital economy. According to the current definition from the European Commission, ‘online platforms’ comprise everything from e-commerce websites to search engines, sharing sites, social media and Internet-based payment systems. Their progressive impact on the economy shouldn’t be underestimated.

Lower prices, improved use of resources and greater access to information benefit all consumers and citizens, especially those with lower incomes or at the margins of society. The prominence of large international – mostly US-based – platforms in the EU has led to calls for specific regulation. Europe’s focus should be on fostering a stimulating environment in which European entrepreneurs can create and grow their own platforms, rather than restricting what non-European ones can do. Europe shouldn’t waste its energy on fixing things that aren’t broken; it should focus on discussions and actions that are constructive.

By 2020, nine out of ten jobs will require basic digital skills, and it’s expected there will be 825,000 unfilled positions for digital jobs. Our start-ups, small companies and large players will all need thousands of front-end and back-end developers, data analysts and web marketers. Hence, leadership in the Fourth Industrial Revolution will require a massive upgrade of Europe’s current workforce. Every European citizen, regardless of age and background, should be able to take advantage of all the digital opportunities that lie ahead.

The EU should take a leading role in making sure all its citizens are schooled in the digitals skills critical to harnessing the digital economy and knowledge society. It must invest massively in education, particularly digital skills. The European Commission has announced that €315bn will be mobilised for strategic investments as part of the so-called ‘Juncker Plan’. These investments should not only concern tangible infrastructure such as airports, broadband connections and wind turbines, but also skills. Education is infrastructure, the most important infrastructure of the future. The EIB and the Commission should therefore consider large-scale digital skills programmes within the plan’s framework.

Data has become a key infrastructure for the Fourth Industrial Revolution; and here, big is beautiful. The world’s production of data grew 2,000-fold between 2000-2012, and 90% of all data circulating on the Internet today was created less than 2 years ago. The EU has recently invested its time in lengthy debates on data privacy and security. These are important issues, but Europe should urgently start to explore the question of how these large amounts of data gathered by the ‘Internet of Things’ could boost competiveness and innovation. The big data revolution requires that we deeply rethink our approach to privacy and data protection in order to keep up with the evolution of technology. We should focus more on the actual use of big data rather than on its collection and analysis. Policies limiting collection and retention are increasingly unlikely to be enforceable by anything other than severe and economically-damaging measures. Rather than privacy authorities, it makes sense to establish data management authorities, which could audit the actual use of data by companies. This would stimulate legal certainty and innovation.

Moreover, data should flow freely within the European Union; data localisation provisions in national legislations have to be removed. We need a coherent governance framework for this new infrastructure and the EU has an important role to play. The risk of underinvesting in data-driven innovation and focusing too heavily on regulation is simply too high. The discussion on data needs a shift from risks to innovation.