The presentation of the new European digital regulatory framework is the latest step in the journey to foster innovation and competitiveness within the European online environment. Although it is mandatory to create an equal playing field, this needs to be complemented by strengthening a European environment to ensure that Europe has world class digital players capable of holding their own in this hugely competitive market.
Brussels (Brussels Morning) In the digital world, ten years is a lifetime. During this last decade alone, digital technology has contributed to society by enhancing global connectivity, enabling the emergence of a data-driven new economy, and providing instant information access wherever we happen to be. But digital technology presents us with challenges too, notably privacy concerns, information distortion, and the relentless dominance of Big Tech.
It has become increasingly clear that something needs to be done to address these challenges, to ensure that consumers are protected and to create a level playing field. These are all good reasons to 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 concerns about dominant platforms.
However, regulation alone is not enough to strengthen the Single Market for digital services and to foster innovation in and the competitiveness of the European online environment.
New policy measures require affected companies to adapt. Ironically enough, the more comprehensive and therefore the more complicated regulation becomes, the more it favours the big players with their advantageous capacity to adjust. There are indications too that GDPR, welcome as it is, is largely beneficial to big platforms that are quickly able to adjust to the new reality. In light of this, one needs to evaluate carefully whether a new regulation is really needed.
Of course, the issue of market dominance is 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 competition.
So, in order to address market dominance of digital platforms, existing approaches of breaking up these platforms should be considered as well. This intrinsically demands 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, which includes 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 objective and not just regulating the current state of things.
Obviously, this requires a thorough understanding of what constitutes the end goal. In the case of strengthening digital Europe, this brings us to the issue of how to generate and sustain 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, we can see that European players are, unfortunately, under-represented. This has been especially true of the last decade, when the European position in digital was weakened as new actors from outside Europe entered the market and acquired leading positions.
Therefore, equal if not greater efforts will be needed to stimulate the creation of European digital champions capable of competing with the existing dominant players. While serious progress has been in strengthening and streamlining Europe’s innovation ecosystems, significantly more needs to be done.
This applies across the board when it comes to issues like 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 still remains outperformed by its global competitors.
To strengthen digital Europe, we need a combined approach.
This calls for a mix of regulatory measures and of instruments fostering the establishment of a competitive European digital industry, one that can build on a sound regulatory framework, based on a sovereign digital Europe representing such European values as 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.