The European Commission defines the "data economy" as one “characterized by an ecosystem of different types of market players – such as manufacturers, researchers and infrastructure providers – collaborating to ensure that data is accessible and usable. This enables the market players to extract value from this data, by creating a variety of applications with great potential to improve daily life (e.g. traffic management, optimization of harvests or remote health care.” The transition to a data economy should, according to the European Commission work for all; putting people first and opening new opportunities for business. Digital solutions are also key to fighting climate change and achieving the green transition. Ultimately the European Union wants to position itself as a “global leader” in the “data economy”.
In February 2020, the European Commission (EC) published “The European Data Strategy – Shaping Europe’s Digital Future”. The purpose of this strategy is to create a single European market for digital data and from this create economic activity utilizing this information market. This two-part series will first delve into the EC’s vision in more detail and, later, explore how the Caribbean can leverage the EU approach in terms of implementing a similar strategy in the Caribbean and also accessing the EU data economy directly.
The EC published strategy recognises that digital technologies have transformed our economies and our society. The EC assessment is that “data is at the centre of this transformation”. According to the strategy document “The EU can become a leading role model for a society empowered by data to make better decisions in business and the public sector”.
To achieve this goal the European Union (EU) will create “a single market for data where:
- Data can flow within the EU and across sectors, for the benefit of all;
- European rules, in particular privacy and data protection, as well as competition law, are fully respected;
- The rules for access and use of data are fair, practical and clear.”
It is estimated that the European digital economy will grow from €301 billion in 2018 to €829 billion by 2025. To drive this anticipated growth the number of data professionals required will have to almost double from 5.7 million in 2018 to 10.9 million by 2025.
The aspect of significant concern to the EU is the technology infrastructure required to support this new data economy and where this infrastructure is located. The Commission estimates that global data volumes will grow from 33 zettabytes in 2018 to 175 zettabytes by 2025.
To achieve this goal of global leadership in the digital data economy the European Commission proposes a three-pillar approach:
- Technology that works for the people: basically ensuring the correct technological infrastructure is in place and that it is ubiquitous across the EU.
- A fair and competitive digital economy: the principal mechanism to achieve this will be the implementation of a “Digital Services Act” to strengthen the Single Market for digital services and foster innovation and competitiveness in the European online environment.
- An open, democratic and sustainable society: this relates to reducing the ICT sector’s carbon emission, and providing greater control over digital information to EU citizens.
Where does cloud computing fit into this strategy?
While the EU has made significant strides in the legal framework (for example GDPR ) the technological infrastructure is seen as a major challenge. According to the European Commission: “The functioning of the European data space will depend on the capacity of the EU to invest in next-generation technologies and infrastructure as well as in digital competence, like data literacy”
The following is an extract from the Communication from the European Commission to the European Parliament, The Council, The European Economic and Social Committee and the Committee of The Regions, which clearly outlines the critical nature of having access to localized cloud infrastructure both in terms of data sovereignty and self-reliance. The European Commission has identified challenges both on the supply and demand sides of European-based cloud technologies to meet the goal of global leadership in the digital data economy:
“Data infrastructures and technologies: The digital transformation of the EU economy depends on the availability and uptake of secure, energy-efficient, affordable and high-quality data processing capacities, such as those offered by cloud infrastructures and services, both in data centres and at the edge. In this perspective, the EU needs to reduce its technological dependencies in these strategic infrastructures, at the centre of the data economy.
However, problems persist on both the supply and demand side of the cloud.
On the supply side:
- EU-based cloud providers have only a small share of the cloud market, which makes the EU highly dependent on external providers, vulnerable to external data threats and subject to a loss of investment potential for the European digital industry in the data processing market;
- Service providers operating in the EU may also be subject to the legislation of third countries, which presents the risk that data of EU citizens and businesses are accessed by third-country jurisdictions that are in contradiction with the EU’s data protection framework. In particular, concerns have been voiced about several Chinese laws related to cybersecurity and national intelligence.
- While third country legislation like the U.S. CLOUD Act is based on public policy reasons such as law enforcement access to data for criminal investigations, the application of foreign jurisdictions’ legislation raises legitimate concerns for European businesses, citizens and public authorities over legal uncertainty and compliance with applicable EU law, such as data protection rules
- There is uncertainty about the compliance of cloud service providers with important EU rules and standards, for example on data protection.
- Micro-enterprises and SMEs suffer economic detriment because of contract-related problems, e.g. non-conformity with the contract or unfair contract terms.
On the demand side:
- There is a low cloud uptake in Europe (1 company in 4, only 1 in 5 for SMEs).
- Significant divergences in cloud uptake exist between Member States (from below 10% to up to 65% of businesses using the cloud);
- Specifically, cloud uptake in the European public sector is low. This may lead to less efficient digital public services, not only because of the clear potential to cut IT costs by cloud adoption, but also because governments need the scalability of cloud computing to deploy technologies like Artificial Intelligence.
- There is frequently insufficient visibility on the market of smaller, often European, providers of innovative cloud services.
- European businesses often experience problems with multi-cloud interoperability, in particular data portability.”
There are significant issues to be addressed by the EU in order to achieve its goal of becoming a global leader in the sphere of the digital data economy. However, it is also clear that the EU has a strategy to achieve this.
However, the current state of play in Europe presents opportunities for the Caribbean. In Part Two of “How the Caribbean can leverage the European Union’s quest to promote and develop a ‘Data Economy’” we shall explore what these opportunities are and what needs to be done to convert opportunities into economic returns. Stay tuned for Part Two!