Europe’s Digital Single Market: DG Connect

Europe’s Digital Single Market: DG Connect

DG CONNECT’s Gerard de Graaf speaks to SciTech Europa about the progress being made towards the Digital Single Market and the importance of other programmes and initiatives at the European level.

Our world is being increasingly transformed by the Internet and digital technologies, and yet many areas do not yet benefit from the full potential of digital tools. The European Digital Single Market will help here by help turning the EU’s 28 national markets into a single one. This will make it much easier for businesses to grow and exploit new markets, and for consumers to have access to a wider choice of products and services at affordable prices. The Digital Single Market has the potential to contribute €415bn each year to the European economy and create hundreds of thousands of new jobs.

Gerard de Graaf, Director for the Digital Single Market in the Directorate-General for Communications Networks, Content and Technology (DG CONNECT) is responsible for a number of policies and instruments which are key to the development of the digital economy in Europe. His Directorate is responsible for defining and implementing the overall strategy for the digital economy and society. It develops, co-ordinates and steers the Digital Single Market Strategy and monitors its effective implementation.

De Graaf took part in a panel discussion on ‘Innovation and Entrepreneurship – Fast and Furious – the Deep Tech Revolution. How can Europe win the Deep Tech battle or change?’ at EIT Digital’s annual conference in Brussels, which SciTech Europa Quarterly attended as the media partner. After the conference, he spoke to SEQ about the importance of the Digital Single Market (DSM), and indeed the Digital Europe Programme, the Connecting Europe Facility, and the InvestEU Programme, for Europe’s future success.

Why is the Digital Single Market important? Why is so much emphasis being placed on it, and why has the Juncker Commission made it a political priority?

Success in the digital economy is very much about gaining scale and speed. In Europe, because of our still fragmented markets, we tend to be too slow in some areas, especially when it comes to scaling up. This is one of the key reasons why American and Chinese companies, with their large home markets, tend to dominate the digital economy, and why there are only a few successful European platforms (only 4% of all platforms world-wide). Europe is punching below its weight.

Indeed, for a successful start-up from one country to be able to scale up across the EU, it effectively has to start-up in multiple Member States because the rules that exist in each one tend to differ quite considerably. The logic behind the single market is thus to make it as easy to operate in the EU as it is to operate in your home country; it is designed to make scaling up happen more quickly through a harmonisation of the relevant rules.

President Juncker saw the potential of the digital economy for Europe when he took office and made the DSM one of the key priorities. The Juncker Commission has made a large number of legislative proposals so far because a large part of the problem is that existing legislation diverges too much. These proposals have been in areas such as consumer protection, copyright, audio/visual policy and, most recently, the General Data Protection Regulation (GDPR). The main purposes of the Commission’s proposals is to harmonise things by bringing greater consistency.

Some 30 legislative proposals, in areas ranging from data protection, copyright, audio-visual, cyber security, VAT, connectivity and consumer protection have been made over the last four or five years in order to bring greater consistency to the legal framework in Member States by overlaying the different national frameworks with a European one. Over 20 of them have now been adopted and implemented. Some of them are well known, such as GDRP, the roaming regulation, net neutrality, the end of geo blocking, and portability of content, and they provide tangible benefits to consumers and citizens.

Others, for example the Cyber Security Act or the Copyright package, are still in the negotiating process but we are confident that they will be agreed in the next few months before the next European Parliament elections (in May 2019). We are making good progress.

Updating and modernising the rules is an integral part of ensuring that the Digital Single Market is fit for purpose. However, it should be remembered that the Digital Single Market is not only a legal framework, it is also a practical one. So, for instance, you need to have connectivity ubiquitously around the EU. If, say, 5G only becomes available in some Member States and not others, then we won’t have a truly single market. We also need better access to (venture) capital to help start-ups and SMEs grow and digitise. There is also a need for strong administrative capacity and responsive e-government services, as well as a need for people with adequate digital skills. This is the raison-d’être of the Digital Europe Programme (DEP) which the Commission proposed for the next EU budget 2021-2027 (the Multi-Annual Financial Framework).

There are many other aspects that we need to work on together with Member States and other stakeholders to put that in place in order for that legal framework to work effectively in practice. We are making good progress here, and there is a strong momentum moving this forwards with the European Council and the Heads of State and Government all throwing their weight behind the Digital Single Market. The European Parliament is also working steadily to achieve agreement on the outstanding proposals.
What do you feel will be the biggest benefits of digitisation for European industry, particularly when it comes to spin-offs, start-ups, and SMEs?

The benefits for Europe’s smaller businesses are clear: digitisation will make it easier for them to grow; they can scale up and explore new markets; and they can get their inventions, new business models, and new products and services into a much larger market (currently, the European single market consists of over 500 million users and consumers, and even after Brexit it will be one of the biggest single markets in the world).

For larger companies, digitisation will, of course, help them to become more competitive. One of the elements of the Digital Single Market Strategy is also to make sure that we are not out-invested and out-competed by countries such as the USA and China. In practice, this means, for example, that we are going have to pool our resources at the EU level to ensure that we have the fastest supercomputers in the world within just a few years’ time. No Member State individually would be able to achieve this given the investments needed, but together we can.

Indeed, we will soon be launching a Call for Tender to buy what will be one of the fastest supercomputers in the world. Thanks to a political agreement on EuroHPC (the body that will manage the EU’s super computers), large and small industries (e.g. in automotive, aerospace, health and pharmaceuticals) and public organisations (universities) will have access to the best supercomputing capacities in the world. This will enable them to design new cars or aeroplanes, implement personalised medicine, or undertake climate change modelling.

Similarly, we are also pooling our resources on artificial intelligence (AI) and cyber security, and we are working to put a European public blockchain infrastructure in place which will provide the necessary security and data protection compliance for our businesses on the basis of open, interoperable standards.

We similarly need to ensure that there is enough people in Europe with the necessary skills sets, and we are therefore also working on this with the Member States and regions to support people as they adapt to the digital transformation and help European companies become more competitive in the global market. This could open up opportunities to repatriate some of the production that has been displaced to overseas markets because of cost advantages; we want to bring that production back to Europe as a part of our support for smart reindustrialisation.

Overall, our efforts are designed to stimulate sustainable growth and prosperity in Europe across different sectors.

How is DG CONNECT working with other DGs to help realise these benefits?

When we started working in this area a few years ago, digital was essentially a sectoral policy, focused on the ICT industry. Now, it is – or soon will be – affecting all sectors, with digital increasingly becoming the backbone of our economy. DG CONNECT is therefore working very hard with all other DGs and Member States and their ministries and departments to ensure that digital is mainstream across all sectors and policy areas.

It is interesting, for example, to see that agriculture is currently one of the fastest digitising sectors in Europe. Health is another sector where digitalisation is proceeding very rapidly. As such, we are working closely with DG AGRI, DG SANTE, and other DGs such as DG GROW, to make sure that digital is widely deployed.

What are your hopes for the Digital Europe Programme?

For the next Multi Annual Financial Framework (MFF), the next budget for the EU, the Commission has made a proposal for a new programme, the Digital Europe Programme, for which €9.2bn has been earmarked. This programme is very much about moving technology out of the laboratory and into the industry and public sectors and making sure that Europe’s businesses have access to the capacities they need. For example, small businesses will be able to access AI, cyber security technologies, supercomputing facilities, and so on.

The Digital Europe Programme is centred on deploying technology and pooling resources because we need to make sure we are not out-invested and that we do not duplicate; no single Member State has the capacity to compete successfully in terms of investment with China and the USA. But together we can, and this is what the Digital Europe Programme is designed to achieve. It is an essential part of the next MFF, and we have seen a lot of interest and support from both Member States and the European Parliament for this because they recognise that it represents a modernisation of the EU’s budget; it is forward-looking and future-oriented.

How will the Connecting Europe Facility help moving forwards?

We would like to see digital taking a much more prominent place in sectors such as transport, mobility and energy, and the Connecting Europe Facility will help here. For example, when it comes to connected mobility, funding will be used to equip Europe’s motorways with the necessary technologies for connected and automated mobility to become a reality. This will bring real benefits in terms of significantly reducing road fatalities, for instance.
We also want to make sure that digital is integrated into energy so that we can achieve greater efficiency, while cyber security is crucial to protecting critical infrastructures such as energy and transport networks by making sure they are adequately protected.

In addition, we believe that there is a role for the Connecting Europe Facility to promote the wider roll out of innovative technologies to improve connectivity in certain parts of the EU – particularly in areas where the business case isn’t immediately obvious. Here, we are working, for example, to bring Wi-Fi to local communities in the EU, and we have also set up a fund with the European Investment Bank (EIB) to provide risk mitigation measures for investments in regions with less densely populated regions where the market is reluctant to invest.

Similarly, what role could the InvestEU Programme play?

The InvestEU programme is very important as a means for industry, and indeed the public sector, to access funding for major projects in the digital field. The Juncker Plan, as it is known, is already making a difference in this area, and there are already significant projects taking place in the digital field.

However, we want that to increase even more as we move forwards, and so one of the four ‘windows’ of InvestEU will be devoted to digital, demonstrating that it is indeed a priority, and we thus expect there to be a significant increase in the number of investment projects in the digital space in the years to come.

What are your thoughts on points raised in the Digital Single Market Mid-term Review? What do you think could be done to help speed up action on previously-presented proposals?

Digital is a very fast moving area, and while we are confident that we will get the remainder of the proposals through the legislative procedure so that they become law, that is not the end of the story. The Digital Single Market is something that will never be finished; it will continue to grow and evolve, and as it does, new challenges will be revealed.

In the mid-term review, we identified a number of areas where there are public policy issues and where there are potential market failures. This included an exploration of the role of digital platforms in the economy, particularly when they become gatekeepers and have the potential to create bottlenecks in terms of market access. Here, we are looking at the role of data, including ownership and access, which is a fundamental element of allowing effective competition to take place.

We also need to provide legal certainty around the responsibility of data. For instance, if algorithms that work on data in an area such as connected mobility or a robot in a digitised factory malfunction, then we need to know who is to be held responsible. Is it the manufacturer? Is it the person who programmed the software? Is it the person who provided the data? Or perhaps the owner of the factory? These are issues which need to be clarified for investments to take place.

The mid-term review thus identified a number of issues that will require public policy attention in the years to come, and the work on this will not stop when the next college of Commissioners take their seats in just over a year’s time.

Regarding the proposals, as I have mentioned, out of the 30 or so we have proposed just a few remain, and many of these are in delicate and difficult areas. Copyright is a good example here, as interests are not necessarily aligned: right holders, platforms, people in in the creative sector, and other users will all have different interests.

As such, it is of no surprise that this raises a lot of political attention and pressure, and sometimes controversy.There is a very strong commitment on the parts of both the European Council, Member States, and the European Parliament to get the job done; the recognition is there that Europe needs to put a framework in place that gives it a chance to compete on the global level. Digitisation is a worldwide phenomenon, and the USA and China won’t wait for the EU to get its act together; if we do not have the Digital Single Market, and if we remain fragmented, then we will be at a significant disadvantage.

Given this general recognition and awareness in the EU, over the next few weeks and months it is likely that we will begin to see the pressure increase even further because the window of opportunity to get the agreements through is closing, which might also mean that there will be a further increase in the willingness to strike compromises.

Beyond that, what are your hopes for the future with regard to the Digital Single Market and, indeed, Europe’s digitisation? How, for instance, will the new European Parliament and College of Commissioners impact the work that has been done already?

We have taken important strides within this Commission with the European Council and Parliament, and we are therefore in a much better position than we were just a few years ago.

There is a significant opportunity for us now, and Europe is well-positioned to take advantage of the digital single market. We are increasingly seeing many new technologies finding their place in the economy and society and actually becoming integrated. While in the past technologies such as mobile telecommunications or the computer also began to integrate, they did not do so immediately, and yet the technologies which are now being developed– such as the Internet of Things (IoT), Big Data, Supercomputing, 5G, AI, blockchain, robotics, virtual and augmented reality, and so on – are all coming together; these technologies are mutually reinforcing. While 20-30 years ago we saw the USA capitalising on the Internet, moving forwards the next Internet will be different: AI will be integrated, as will blockchain, and the focus will be much more on areas such as Big Data.

In Europe, we are looking forward towards an exciting new phase in the development of technology and, because of the steps that have already been taken and because of the model and values we have, there are a number of advantages on which we can build. We have a very strong deep tech community; we have got very strong start ups in areas like blockchain, AI, and cyber security; we have got very strong public sectors; and we have got strong manufacturing, which is now digitising.

We are only at the beginning of the digital revolution. Thus, while the game up to now may have been about social media and electronic commerce marketplaces, the next phase will be very much about the industrial Internet and the digitisation of public sectors like health, transport, and energy. Here, Europe is very well positioned because of its legal framework and because of its values and capabilities to lead.

Over the next three-to-five years, the critical question will be whether Europe is going to be a leader or a follower. I remain optimistic that we will be the former, as we are in a good position and there is a significant commitment on all sides to ensure that Europe can and will lead in this area. Now, it is a matter of playing our cards right in the digital single market.

Gerard de Graaf
Director for the Digital Single Market
DG CONNECT
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