Europe Braces For The Game Of Data-Driven Economies

18 August 2020

Data are the raw material from which we derive knowledge to create innovations. In healthcare, which is only just entering digital transformation, data are the basis of personalized healthcare; they can also speed up research into new drugs. Without data, there is no development of artificial intelligence systems.

Indeed, data are one of the most valuable natural resources in the modern world, but data can also have a different value depending on the historical context. In European culture, data are seen as private property, a personal good, unlike in China, where they are a collective and common good, or the US, where their business value is the top attribute.

China and the US are both huge markets, with 382 million and 1.393 billion consumers of digital solutions. Dynamic development of these markets is possible thanks to access to citizens’ data, and considerable investments in digital infrastructures. Europe misses such a common space. Until now, the Member States of the European Union have sought to strengthen their competitiveness in the digitization market individually. However, it quickly turned out that such a strategy stood no chance of success. When acting alone, even such strong economies like France or Germany were losing the race with technology giants from American or Chinese silicon valleys.

Importantly, in this game, the future and prosperity of citizens are at stake. Digitization creates jobs and leads to economic growth. The ability to develop digital innovations will determine whether Europe becomes an exporter or a mere importer of innovation. And technologies are more than services and products. Actually, they are about values.

Potential with difficulties

In order to play a leading role in the data-based economy of the future, Europe must harness the power of its single market with 446 million consumers, academic and research centers, and an exceptionally robust network of small and medium-sized businesses. Therefore, a European strategy for data presented in February 2020 aims at building a single market for data, which will guarantee the availability of the data necessary to generate innovation in the economy and society.

The EU plans to create a single data market in which data will be able to flow not only between the individual EU Member States but also between different sectors of the economy. The strategy emphasizes compliance with privacy and data protection laws and delivers practical and transparent rules for using data. The EU is to become an attractive, secure, and dynamic data-agile economy with interoperable systems and services based on the European cloud.

One of the elements of the new ecosystem will also be the secondary use of data, for example, for scientific purposes. The intended hallmark of the European approach to data would be to equip EU citizens with the rights, tools, and skills necessary to maintain full control over their data in accordance with the principle of “transparent and ethical data processing and the development of technology which puts people first.” The benefits mentioned in the strategy include improving the quality of healthcare, creating safe and environmentally friendly means of transport (such as autonomous and electric cars), reducing the costs of public services, and sustainable economic development. Enterprises involved in the development of digital services will gain access to data as part of the “secondary use” framework, which should accelerate their business progress.

Specific steps for the years to come

So much for the promising visions of the future. The road to the strategy implementation is going to be a bumpy one. Twenty-seven separate EU’s economies are at different stages of development, so far unable to implement a cross-border data exchange due to the lack of interoperability of their information systems. Data are not only scattered and trapped in silos but, at times, also fall short of quality standards. Significant differences in national legislation may stand in the way, but also cultural factors, such as trust in public institutions.

Once all barriers are overcome, less obvious obstacles may arise, such as the protection of national interests that conflict with European unity and solidarity. Indeed, data are stored in silos not only because of technical shortfalls to exchange them but often because of mere unwillingness to share them.

The strategy includes a specific roadmap to acquire a leading position in the global data-based economy. In the period 2021-2027, the Commission plans to invest 2 billion EUR in the European High Impact Project. The driving force behind the development of new services will be small and medium-sized enterprises. All citizens are to gain control over the data, although it is not clear yet what this arrangement would look like. Besides, the new framework provides for supporting the development of the European data spaces in some key sectors, such as industrial production, green trade, mobility, and healthcare.

Europe aims to capture the benefits of a better use of data.

The European Commission will start the procedure for adopting the implementing act on high-value data sets (according to the plan, in Q1 2021) under the Open Data Directive, making such data sets available across the EU, free of charge, in a machine-readable format and via standard application programming interfaces (APIs).

By Q2 2022, a coherent framework will be developed, covering a variety of rules (including self-regulatory solutions) that will apply to cloud services. As a first step, the set of rules on cloud computing will be a compendium of existing codes of conduct for cloud service providers and cloud service certification systems in terms of security, energy efficiency, quality of service, data protection, and data portability. By Q4 2022, the Commission will facilitate the creation of a cloud market for private and public users in the EU.

The strategy notes that by 2025, the EU and the Member States should have halved the current shortage of 1 million digital specialists. That means investing in digital skills. The priority of the updated Digital Education Action Plan is to increase data access and use so that educational and training establishments are prepared to meet the demands of the digital age.

One of the nine common European data spaces will be the European health data space, essential for advances in preventing, diagnosing, and treating diseases, as well as for informed, evidence-based decisions to improve the accessibility, effectiveness, and sustainability of healthcare systems. In addition to the creation of nine common European data spaces, work will continue on the European Open Science Cloud, which provides seamless access and reliable re-use of research data to European researchers, innovators, companies, and citizens. It is expected to be fully operational by 2025. By Q4 2021, a framework will be created to estimate the economic value of data and measure their flow in Europe and between Europe and the rest of the world. Consultations on the strategy continued until May this year. It is difficult to say to what extent the crisis related to the COVID-19 pandemic and other resulting challenges will delay the practical implementation of the European strategy.

Stake in the game

The EU dreams of becoming a leading role model for a society empowered by data to make better decisions – in business and the public sector. Some specific numbers can be found in the strategy. The volume of data produced in the world is increasing, from 33 zettabytes in 2018 to an expected 175 zettabytes in 2025. Furthermore, the way how data are stored and processed will change dramatically over the coming five years. Currently, 80% of the processing and analysis of data takes place in data centers and centralized computing facilities, and 20% in smart connected devices, such as cars, home appliances or manufacturing robots, and in computing facilities close to the user (“edge computing”). By 2025 these proportions are likely to be inverted. The value of data-based economies will have increased from 301 billion EUR in 2018 to a projected 829 billion EUR in 2025. Today, this figure accounts for 2.4% of European gross domestic product.