Essential Business

Europe can’t become an island in a digital ocean

 In Digital economy, EU Presidency, In Focus, News

In the second of a series of webinars examining the Portuguese presidency of the European Council and United States trade, the focus turns to the pressing need to set up a digital and artificial intelligence regulatory framework that allows Europe to be competitive but does not compromise the data security of its governments, companies and citizens.

Text: Chris Graeme

Delivering a digital recovery is not only one of the European Union’s main priorities, a priority for Portugal’s presidency of the EU Council to June, it also a cornerstone of the Portuguese government’s policy to modernise the country’s economy and accelerate digitalisation to make it more competitive globally.
But in this commitment to accelerating Europe’s Digital Transformation, what role can the Portuguese Presidency play?
Ricardo Castanheira, Digital-Telecom Counsellor Coordinator, Permanent Representation of Portugal to the EU says that in 2020 Portugal launched its National Digital Action Plan which lays down the actions the country will take in leading the transition.
“This has been a long-term political goal for Portugal for some time and we have legislative files of enormous importance to deal with during our presidency,” he said.
The fourth pillar of the Portuguese Presidency focuses on the Digital Services Act, which the European Commission adopted just before the end of 2020.

An ambitious agenda

The Commission is also expected to adopt a European Approach to Artificial Intelligence (AI), EPRS | European Parliamentary Research Service 4 e-Privacy on the respect for citizens’ private lives, and the protection of personal data in electronic communications are all proposals that have been on the table since 2017, and which the Portuguese Presidency hopes to push towards completion by the end of June.
The Digital Services Package, the first comprehensive and horizontal legislation to regulate modern-day digital platforms, is a key priority for the Presidency which has an ambitious agenda for the negotiations.
“We cannot wait another four or five years to conclude such an important piece of legislation,” says Castanheira.
“With the increase of illegal content, as well as disinformation campaigns, we believe that the Digital Services Act is an opportunity to define a common European approach for the governance of the online space, in line with our values, as well as an opportunity to strengthen EU soft power globally, by putting forward the first ever regulation on online platforms, which we hope can act as an international regulatory standard,” he says pointing to the GDPR. (General Data Protection Regulation)

Data governance

The Portuguese Presidency will advance negotiations on the data governance act, for example, which aims to improve the conditions of data sharing across the union that is an essential first step towards the completion of a single market for tech.
“Portugal believes that Europe should aim at becoming a role model for a society powered by data, to uphold and improve the safe flow of data within Europe. We are confident that data driven information will bring enormous benefits for citizens through its potential contribution to the European Green deal,” says Ricardo Castanheira, Digital-Telecom Counsellor Coordinator, Permanent Representation of Portugal to the EU
Casper Klynge, Vice-President, European Government Affairs, Microsoft says that Portugal’s fourth presidency of the European Union comes at quite a decisive moment, not only for Europe but across the world.
“It is interesting that every time that Portugal has held the presidency, something important has happened in terms of Europe’s external relations, the Treaty of Lisbon being the most obvious example,” he says.
While praising the Portuguese presidency and the European Commission for showing leadership on digitalisation and of its absolute necessity to make Europe competitive, Klynge stressed it had to be done in a sustainable way.
One good thing and perhaps the only one to come out of the Covid-19, and I am not sure we could have said this with such confidence 12 months ago, is that we are exiting this crisis with a dual focus on digitalisation and sustainability at the same time,” he said.
The Microsoft European government affairs VP said it was an important step forward that removed the misconception of a contradiction between “going digital and going green” on the same timeline. In fact, what many of these new technologies are demonstrating is that, “You cannot go green and be sustainable without using the latest digital technology.”

Open strategic autonomy

Maria da Graça Carvalho, MEP (EPP, PT), European Parliament said that that while there are conflicting views regarding Open Strategic Autonomy, which means that the EU, like the US are free to chart their own course in world affairs, the world economy, and world trade in line with each bloc’s interests and values, at the same time, it means countering an idea that autonomy is mistaken for autarky or being “isolationist”.
In order to deal with challenges, cooperation with others is required and more global cooperation is needed to deal with the health and economic issues raised by the pandemic, or the climate crisis, indeed, any of the issues that require more cooperation with others rather than less. That requires building strong alliances. It is in this way that the EU is approaching the updating of the “why” and the “what” of its trade policy. And, of course, in all this the transatlantic relationship with the US is fundamental.
Clea technology and digital technology are part of the same transformation says Carvalho stressing that the Portuguese presidency is exactly aligned with this transatlantic dialogue with the US and President Biden,
Other dialogues too, that have been forgotten over the past few years, like with India from the technology cooperation point of view and on digital, should be stressed with this Portuguese presidency with an openness.
This has been particularly pertinent during the Covid-19 crisis where the pandemic has “forced us to rethink some of our supply chains, as it was obvious during the recent crisis that we need to keep an open attitude in research, in innovation and in an open economy, she said”.
“We need to make sure that this strategic autonomy concept doesn’t lead to closing ourselves off as the opposite is required and beneficial as was proven in science with the fast development of the vaccines which was all down to cooperation.”

Private sector cooperation

But what can the technology industries and companies do? The short answer is a lot. Klynge says there is no wholly public-sector solution to the challenges such as Covid-19 that are being faced.
Klynge stresses that it has to be a public-private stakeholder approach, and the private sector must also assume some responsibility for bringing the world out of the pandemic, focusing on the recovery and setting an example and responsibility towards ‘skilling’ which had been the domain of the public sector, but where now the private sector, including Microsoft, was now “really stepping up to the plate” to develop the skills sets and competences that Europe and the world need for today and tomorrow.
With zoom etc without these new technologies the economy would have contracted even More and we would have seen many more people unemployed. Without tech and machine learning AI, bots, it would have taken a long time for our health care services to develop things we have seen in a record speed and handle the many cases of Covid in intensive care units.
We want to develop the infrastructure for thousands of European companies, and we hope to be able to do that by providing the latest state-of-the-art technology because that will benefit the European economy.

Go digital and be globally competitive

Diogo Santos, Partner and Operations Transformation Leader, at Deloitte Portugal, Digital says that digitalisation has been at the core of the consultants’ strategy for some time now, and opined that European Commission digitalisation would be a very clear lever to help recover from the pandemic.
“In this globalised world, it is not only companies that compete, but also countries that compete with each other. We have to be very pragmatic about this for ease of doing business,” he said.
In the ranking of the most competitive countries in the world compiled by the World Bank, 50% of in the top 20 are European countries but not one European country is in the top 3.
Diogo Santos says that in order for Europe to become more competitive, digital plays a very important role in cutting the costs of having businesses located or relocating in Europe. “This is a very strong argument for the investment we are placing in digital”.
“With startups, if we compare Europe with the US or Singapore, the indicators suggest that the percentage of people who work in startups, and the number of unicorns, is 5 times greater than in Europe. We need to close that gap because we are competing on a global scale,” he said.
It has to be taken into consideration that in Europe there are small countries where for the domestic market digital is not that significant.
“Not digitalising makes it much more difficult to be competitive overseas for the non-digital economy, whereas countries like the US or China are able to be more competitive given their sheer scale irrespective.
In a digital economy, the size of a domestic market isn’t a relative factor anymore, because it is a lot easier to be a global player in the world’s market if you are digital, rather than just in your own country,” says Santos.
“We do have very recent unicorns, Farfetch which is a marketplace for luxury goods, Outsystems for low-code development, these are companies that are able to be global giants because they are working in the digital world which opens up a lot of opportunities for smaller countries to become competitive.

Artificial Intelligence

Both the EU and US regulate cooperation on Artificial Intelligence and it is recognised that both sides need to develop trustworthy solutions for it.
Diogo Santos believes that any kind of regulations should be flexible, future proof and business friendly, and should avoid excessive and unnecessary regulatory burdens which could scare off investors, adding that AI is critical for economies that want to be really innovative.
Ricardo Castanheira emphasises that it is absolutely necessary to set up a trustworthy Artificial Intelligence (AI) framework to boost the cutting-edge technology’s safe development for businesses and consumers.
“It is crucial to foster a global dialogue on AI, so we can avoid fragmentation which ultimately harms our economies,” he says, adding that Portugal fully supports the EU becoming a global driver in the digital data domain as “Europe can’t risk being an island in a digital ocean”. “Together we are not only building a solid regulatory structure, but also calling for a high degree of trust among stakeholders in the data-sharing department,” he said.

Cybersecurity

There have been a number of high-profile cyber attacks in recent years, and companies like Microsoft spend literally millions on creating and updating defences against these external threats.
Casper Klynge says Microsoft was not entirely finished with investigating the consequences of the last major China-linked attack this year and says that it proves the flip-side of the coin in terms of the digitalisation that Europe and Microsoft are going through.
“We have to do this in a way that defends our citizens and administrative infrastructure. It involves other companies as well as Microsoft – the US company Cisco is one — as we are in the front line,” says Klynge who points out that Microsoft has 3000 people working 24/7 just on defending its systems and platforms and technologies. “I think a lot closer cooperation and collaboration between the private sector and the public sector will be required.”

 


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