Digital Compass: Europe’s Digital Sovereignty?

Europe’s reliance on foreign digital services is a concern for national public services. In France, the new Health Data Hub, a platform designed to centralise data and access data from patients, health practitioners and hospitals, is operated by Microsoft, due to the lack of a French alternative that meets the government’s requirements. The annulment of the Privacy Shield by the European Court of Justice has led the French data regulation body (the CNIL) to forbid the exportation of French health data outside of the European Union, and has significantly slowed down the creation of the data platform. If this shows the will of the European Union to bend its power relationship with American companies, it is also proof of the dependency of the public sector on foreign technologies and of European actors’ limited freedom of choice.

The iceberg: the need to foster the development of efficient, effective and innovative European B2B services

At a less visible level, Europe also relies on non-EU actors in key areas of its digital infrastructures, especially cloud computing. Cloud providers are managing to move up the stack, from providing infrastructure as a service (IaaS) using platform as a service (PaaS), to offerings in data spaces, thus leveraging their dominant position in IaaS to own the digital B2B space.

In the near future, this dependence on foreign infrastructures risks growing bigger. Europe lags behind on the deployment of its own submarine cables and of satellite-based communications, with consequences on the speed at which data can be processed using American actors. Some American platforms are new actors in these strategic fields. For example, the coalition led by Facebook, of which Orange is a member, will build a 37,000 km cable to link 23 African countries with the Middle East and Europe. Most American digital companies also invest heavily to launch satellites that will play a key role in telecommunications. The race for space has economic and geopolitical consequences since it will allow different actors to provide services in parts of the world that were previously insulated from online networks. In the long run, Europe’s sovereignty can become at risk if such actors start offering phone subscriptions using their own satellites, reinforcing their dominant position across various sectors of the communications industry, potentially weakening infrastructures’ diversity and the freedom of choice of consumers and companies alike.

How can the European Union react?

In light of this brief overview of the challenges Europe faces when speaking of digital sovereignty. Ursula von Der Leyen has claimed she will make 2020-2030 Europe’s digital decade.

We too are convinced that European actors must be able to choose freely between efficient, secure by design and innovative networks and digital services. Our model of sovereignty takes into account the dependencies between foreign actors and European ones. The objective is to ensure that the existing infrastructures and services can be used at the European Union’s advantage in order to foster economic development and freedom of trade.

1. Accelerate the digitalisation of the European economy and society, in order to increase demand in digital services as well as to encourage the development of cloud-native B2B services, which will be the main source of value in the years to come

Digital data-driven services have the potential to offer solutions to today’s challenges around health, mobility, climate and modern industrial operations. The first step is to make sure innovative services across the ICT stack are developed in Europe. To do this, the European Union needs to continue investing in digital development. In this regard, we welcome the European Commission’s requirement, in its vision for 2030, that 75% of European enterprises should use cloud computing services, big data and Artificial Intelligence and that more than 90% of European SMEs should reach at least a basic level of digital intensity. The digitalisation of existing organisations is essential, in particular to foster demand for digital services and to create value in Europe. Similarly, the European Commission’s ambition to have a 100% online provision of key public services available for European citizens and businesses, 100% of European citizens to have access to medical records (e-records) and 80% of citizens to use a digital ID solution will increase the role of public actors in creating demand for digital services.

In order to foster European companies’ digitalisation, the European Union should also continue investing in innovation programmes as well as to encourage private investments. The objective is to help them develop data strategies to gain a competitive edge. In order for them to understand the benefits of technology, more cooperation and experimentations are needed between telecom operators and companies. Innovation hubs could be deployed with the help of national governments in all European member states.

At the same time, the European Union needs to continue investing in the deployment of new services. Investment programmes such as the €8,2 billion Digital Europe Programme are necessary and should become a central piece of the European Union’s strategy. Investing in human capital is also critical: without an acute understanding of technologies, sovereignty cannot be achieved.

Future data uses will be inside companies and will stem from data-sharing between companies and across sectors. The fourth revolution rests on industrial data, and the European Union must seize this opportunity. The sharing of data between private actors must be facilitated. The European data strategy from February 2020 makes this objective very clear. In this line of thought, we encourage the creation of European common data spaces.

2. Commodify digital infrastructures to ensure that European organisations have freedom of choice while leveraging innovative services

Interoperability between digital platform services must be fostered (cloud providers, digital intermediaries, etc.). European companies and citizens must be able to use the services that best suit their needs. To do so, they must be free to change services as their requirements evolve, including to choose emerging European ones. If companies want to, they should also be able to segment their needs and use different actors for different services. In this regard, we expect a lot from the Digital Markets Act to reduce locking effects and the gatekeeping power of large platforms: actors with a gatekeeping role will be asked to share data with other players or offer the possibility for new competing platforms to use their key features.

In parallel, the European Union must continue its efforts to reassure European companies on the perceived risks associated with data processing. We welcome the Gaïa-X project, which aspires to develop standards and promote secure interface options for companies to access, share and process data. These standards must ensure the necessary commodification of cloud computing, in order to allow European companies to innovate and create their own digital solutions.

3. Emphasise the importance of scale in the digital sector, and allow European companies to reach the size they need to compete internationally

Scale matters. Digital data-services need scale to be successful; digital companies need to be able to grow organically, without costs and obstacles stemming from national rules. Put simply, European digital actors need the Digital Single Market, and they need it fast.

European companies must also be able to gain scale in an inorganic manner, through means such as mergers. In order to do so, the European Union’s competition policy doctrine, and more generally its regulations, must be updated. For example, in May 2020, the European Court of Justice (General Court) annulled a decision by the European Commission’s competition authority, which in 2016 blocked mobile operators O2 and Three UK from merging. In the following months, the European Commission appealed this decision by the European Court of Justice.

Whilst these issues are predominantly political, they should nevertheless be at the center of Europe’s strategy for the future. We regret that these challenges are not addressed in Europe’s vision for 2030. These tensions between various parts of the European institutions need to be dealt with. Europe has been focusing for too long on consumer prices, in an inward-looking position. Should it be reminded that, whilst it prohibited the merger and appealed the European Court of Justice’s decision, the Commission authorised in 2014 the merger between Facebook and WhatsApp, thus significantly reinforcing Facebook’s market power ever since? Today, the European Union must look outward and build European giants. This means allowing companies to merge and to reach the scale they need to compete internationally.

4. Create a process to identify the sectors that pose important sovereignty questions and that should be prioritised

Whilst the European Commission is pushing forward ambitious projects to invest in strategic technologies such as 5G, microprocessors, quantum computing or artificial intelligence, to date these fail to systematically assess Europe’s sovereignty risks - in the sense of a lost ability to make free choices - with the exception of the 5G cybersecurity toolbox.

Our view is that the European Union can develop its own competences and preserve its freedom of choice whilst using foreign services. In the long run, this will allow European companies to grow and reach the scale they need to compete with international players. However, in order for this strategy to work, the European Union and national States need to pay special attention to smaller European countries, who might see the emergence of national giants from other parts of Europe as a threat to their individual sovereignty. Addressing this issue requires strong coordination and better communication between European and national leaders to constantly stress out our common interests and the mutual dependencies that exist inside the European Union. The European Union’s strategy should build on the specificities of each country, redistribute responsibilities and competences inside the European Union, in order to insist on one fact: our sovereignty can only be shared.

Copyright: Olivier HOSLET / POOL / AFP