Technological development has, in the past few years, fundamentally changed the way people live their lives. In the midst of this transition it might be difficult to comphrehend the speed of the change currently affecting society and the impacts they will have in the long run.
The Covid-19 pandemic has increased the usage of existing technology, as most of us have learnt to spend large amounts of time in video meetings with colleagues, lecturers and friends. As corporations understand the potential savings of the digitalisation of processes and business models, digital infrastructure becomes more valuable and strategically important.
Europe is lagging behind in the digital economy with most of the world’s unicorn companies being placed on the US west coast and the Chinese east coast, followed up by an emerging India. It is time for the EU to properly address this problem by creating possibilities for innovative entrepreneurs and the innovative companies to flourish.
Regulatory leadership
The European Commission has as one of its six overarching priorities to create a Europe fit for the digital age. A key component of this strategy is to take regulatory leadership over digital services, something that is well needed after the Laissezfaire approach that has made the market for platforms an oligopoly.
Donald Trump showed with clear distinction the power of platforms, and how their algorithms that promote emotionally driven content can be utilised to divide a society. The attemped coup that took place in Washington Capitol on the 6th of January and the following censorship of Mr. Trump and others has brought the question ofof balancing between the fundamental human right of free speech and the risks of giving agitators powerful megaphones to the fore.
It is by no means an easy question for Christian democrats, Conservatives and Liberals. Ideologically respecting the basic rights of a liberal democracy while acknowledging the effects of a digitalised world is not a straightforward combination. It is clear that the regulatory leadership needs to be taken.
The need for innovation
Even though Europe aims to become the regulatory leader of the world in the digital area, there is still a lack of innovative companies in thethe Union. Will regulatory leadership make it easier or harder for innovative companies to thrive within Europe? It is impossible to know yet depending on how the policies will shape. There is however a significant risk that regulation aimed at digital companies will punish innovation instead of making it thrive.
Already in 2010, the European Commission declared in the Horizon 2020-strategy that Europe had a “innovation emergency”. In a recent report published by the Swedish foreign policy thinktank Stockholm FreeWorld Forum the authors elevate six areas important for innovation. These are,
- Strong legal certainty and rights of ownership,
- A straightforward taxation system,
- Efficient savings through functioning capital markets,
- Low barriers for entry and exit in markets,
- Entrepreneurial human capital.
Innovation policy needs to be more efficient in Europe in order to for the Union keep up with global competition.
Geopolitical implications
In order to maintain economicand political power between the US and China in the future, Europe need to up its innovation power. In a digital landscape that is based on private infrastructure controlled by powerful firms, and ultimately in the case of China, hostile foreign powers, large digital companies are strategic assets for global actors.
If Europe continues its lacklustre approach to innovation, it will, in thelong term, erode its influence in the global arena. In a podcast by Harvard Business Review from 2020 Ian Bremmer, an American political scientist, declared the geopolitical situation in the digital arena as becoming bipolar between China and the US rather than multipolar.
That Europe is vacciliating on its stance towards China, doesnot put the continent in a strong position. By not tackling a Chinese dictatorship that aims to use the influence of new technology and data in order to shape a Beijing lead world order, the clouds over the European continent aredarkening.
If the European Union and its Member States do not regain their innovative power, it might see its world leading position completely slip away. With dictatorships having control over an ever-increasing number of technological platforms and thereby influence, the liberal and rule-based world order is threatened. The consequences are for Europeans to fear.
