Today, Europe is the world’s largest exporter of goods and services, with trade accounting for 43.9% of the bloc’s total GDP. This success story was achieved due to savvy business and policy decisions over the last 50 years. Industries that were seeded and incubated have grown to become world-leading and the region continues to enjoy the economic benefit today.
However, time stands still for no economy. The game is changing.
The Commission estimates that the EU’s data economy will be worth €829 billion among member states by 2025. It was €301 billion in 2018. The opportunity lies in organizations’ using data to create new business models and reinvent products, services and customer experiences. For example, in 2020 we observed that the automotive industry had hired more software engineers than mechanical engineers in the past year.
As Asia and North America double down on innovation to compete in a data-led age, transformation – particularly among Europe’s legacy enterprises – is not just an opportunity, it is an imperative. And here Europe is in danger of lagging. McKinsey notes: “Europe a century ago was a global powerhouse of innovation, but it has started to lose its edge: today, despite some notable exceptions, many innovative companies are found elsewhere.”
So how can we secure our place on the international stage today and tomorrow?
Unfettered, un-regulated innovation at all costs is clearly not desirable, especially as the outcomes can often favor the few. But this is exactly why Europe has an opportunity to lead and create a new direction that balances innovation with societal responsibility. For us, competing successfully means creating value that goes beyond just GDP – we should think holistically: investors, workers, residents, citizens. In the long term, a market can only thrive in a society that works for everyone.
Every person and organization should benefit from data and drive their own innovation, whether it’s a small business, local municipality, NGO or multinational enterprise.
O2matic, in Denmark is a great example of what is possible. With only 13 employees, the company developed AI-based technology that automates oxygen therapy for patients with chronic obstructive pulmonary disease (COPD), a condition that affects 328 million people annually. The traditional treatment method – which is more than 100 years-old – requires health clinicians to make manual adjustments up to 30 times a day. The new therapy improves the quality of treatment for better patient outcomes and frees up precious staff time, allowing them to help more people.
Data-based business models underpin many industries and so our choice is not if, but how Europe wants to participate and be successful. The same applies for the public sector, where digital transformation enhances governments’ services to citizens.
So, what is the best path forward? How do we balance enabling innovation at speed and scale with the need to protect the welfare, security and privacy of citizens and the intellectual property of companies? And, at the same time, stay steadfast in preserving Europe’s sovereignty, while remaining committed to openness, rules-based international collaboration and trade?
It’s worth noting here that people can mean different things when they talk about sovereignty. For us, it is not a buzz word, but speaks to Europe’s valid concern to maintain the capacity for self-determination. Self-determination does not mean “go-it-alone.” Rather, it is about the ability to do things on your own terms. We will come back to the discussion about sovereignty soon with a separate piece on how we think Europe is actually uniquely positioned, with its history and traditions, to get digital sovereignty right.
One way to think about aligning innovation with societal responsibility is to see it as a question of getting the guardrails in place to achieve the right balance – like a set of European Terms & Conditions (T&Cs) for the data economy.
T&Cs define a pact between stakeholders and the roles and responsibilities of the parties involved. As we navigate the transition to a data-led world, companies, policy makers and technology firms need to work together to ensure our shared T&Cs work for everyone. And it’s vital they not only honor the letter of the regulatory and legislative conditions distinct to the region, but also the spirit behind them.
It’s never been more important for us to foster debate and collaboration across the private and public sectors. Nobody will have all the answers at any given time. But it’s critical we continue to ask the probing questions as to whether our T&Cs truly enable innovation to support competitiveness today and tomorrow without accepting any compromises for European citizens.
It’s a more challenging road to travel, but more sustainable in the long term in our opinion. The European route – with its T&Cs – will shape a data economy that creates value for all, not just dividends for some.
While some issues need to be worked through in collaborative discussions, Microsoft comes to the table with some core beliefs.
Data-led business models are built on a foundation of trust. It’s important to us that our customers and partners understand that we do not compete with them. Their success is our success.
We believe innovation not only has a critical role in driving economic growth – but also in supporting greater sustainability and helping shape more inclusive communities. Our Tech Fit 4 Europe pledge outlines the opportunity we see here: We need (1) trustworthy tech, in line with the rule of law. We need (2) tech for jobs and green growth, in support of Europe’s twin transition. And we need (3) responsible tech that empowers Europeans to control their data and benefit from their data.
In the months ahead we’ll explore different aspects of our shared T&Cs. We’d like to delve into these challenges with an eye for honing in on the challenging questions that leaders should be asking of ourselves and others.
The bottom line for us is Tech Fit 4 Europe: we believe the tech sector needs to adapt to Europe, not the other way around.