While the spotlight is on the distribution of Commission portfolios, it is unclear how the future mandate will tackle the pressing geopolitical and economic issues facing Europe. As we wait for the pieces of the jigsaw to start to fall into place, taking a step back might provide some valuable insight into the next chapter of EU Digital Policy. In a discussion moderated by Financial Times’s EU Correspondent, Javier Espinoza, CERRE Academic Director Alexandre de Streel and Senior Expert in Executive Vice President Margrethe Vestager’s cabinet and author of the upcoming book on “Digital Policy in the EU – Towards a Human-Centred Digital Transformation” Werner Stengg, discussed how the EU is at a pivotal moment in shaping its digital policy, as the union navigates through a landscape marked by rapid technological advancements and evolving geopolitical dynamics.
Looking Backwards: The Evolution of Digital Regulation
In its early years, the tech industry was characterised as a highly competitive space with low barriers to entry and a high abundance of small actors. Over the last two decades, however, we have witnessed the ‘platformisation’ of the internet. These platforms now hold a competitive advantage, as they set the frame for the markets they organise. As the landscape evolved, so too has the need for regulation.
Promoting Competition
The EU’s pursuit of competition in digital markets appears in response to the rise of dominant players which have altered the market’s competitive landscape. Today, network effects and the advantages of data access have solidified the position of these larger entities, creating significant barriers to entry for new players. Additionally, the benefits of incumbency pose challenges as new players attempt to penetrate established markets. Stengg highlighted that the EU aims to “empower our companies to have a fair chance on the market.” To address this, alongside the robust implementation of the Digital Markets Act, the EU must sufficiently consider the potential of emerging technologies to either enhance competition or further entrench dominance.
Focusing on Regulating Risks
As digital environments and tools play an ever-larger role in our lives, the risks associated with that role are also becoming more pronounced. De Streel highlighted the “‘Silicon Valley effect’ which is that Californian values may be transferred to Europe via the technologies”, mentioning that the associated philosophy “creates different risks for the economy, society, and our values”, and our thinking needs to evolve so that the EU “maximises the opportunities platforms have provided” “while minimising the risks”. As a rule, regulation should be targeted and risk-based, focusing on firms that present the highest risks to public interests. Asymmetric regulation, which concentrates on these high-risk entities, is generally preferable to broad, symmetric regulation, which could stifle innovation and increase entry barriers for smaller firms. In the face of the increasingly complex web of responsibilities, regulation should be simplified to ensure ease of compliance and enforcement.
Leveraging the EU’s Market Power
By leveraging its market power, the EU aims to secure both the rights of its citizens and the economic interests of its industry, avoiding 27 disparate approaches. “If you comply, you have access to 450 million consumers”, said Stengg. To achieve the goals of the newly adopted laws, European institutions must maximise synergies between different policies and tools, ensuring consistency and effective implementation. Additionally, the newly adopted laws must be evaluated independently. According to de Streel, regulatory mistakes are inevitable, and it is “very important that those mistakes are corrected quickly”. It is vital that when “adapting laws, the correction feedback loop is much quicker” than has been the case with the GDPR as an example.
Industrial Policy
It is important to consider the influence of geopolitics on digital regulation, as the promotion of resilience, both in terms of security and digital sovereignty, increases in importance. Stengg mentioned the aim of “reducing dependencies and responding to vulnerabilities” as a key element of digital policy. According to de Streel, industrial policy “has to become a geopolitical priority.” Specifically, “we need more brains, so that means changing our migration policy. We need more financing; this means changing our capital markets. We need chips. We have started on this, but that may not be enough. We need cloud and we need data. What worries me is that Europe is very good at adopting laws” but when it comes to industrial policy “this is very new for Europe”. Nonetheless, it appears that the Commission is well placed to facilitate the required paradigm shift.
Looking Forward: Ambitions for Europe
Drawing from past lessons, CERRE’s Ambitions for Europe 2024-2029: Harnessing Regulation to Boost the Twin Transition provide a roadmap for the future, highlighting the following ambitions for the coming years:
- Towards a new regulatory approach: Adopting novel ways of working to adapt to new challenges
- Build robust, resilient, and future-proof digital infrastructure and foundational technologies
- Ensure a safe, positive, and fair online platform ecosystem
- Create a thriving, vibrant, and competitive data and innovation economy
These ambitions are designed to guide the EU through the twin – digital and green – transition, ensuring that regulation not only addresses current challenges but also lays the foundation for a resilient and innovative future.
