EU Digital Strategy | Tech sovereignty and common EU values

Written on 9 Mar 2020

The theme of "tech sovereignty" for the European Union runs strongly through the European Commission's digital strategy papers published on 19 February, informing policy, funding and legislative priorities for the current Commission. The goal is for the EU to be self-sufficient in its digital infrastructure and capabilities for the benefit of its economy and citizens, while welcoming global providers of digital products and services as long as they adhere to EU values and regulation.

Three papers were published. This article focuses on the paper on "Shaping Europe's Digital Future ", which sets out the overarching goals of the strategy (and also provides further insight into the Commission's 2020 work programme). In addition, the Commission went into greater detail about two particular areas in the European Data Strategy paper and the White Paper on Artificial Intelligence.

As regards the main digital strategy paper, the Commission sets out its three headline objectives:

  • technology works for people;
  • a fair and competitive economy; and
  • an open, democratic and sustainable society

Technology that works for people

The first of the three objectives emphasises the need to invest in connectivity infrastructure (including gigabit connectivity and 5G networks) and emerging technologies. As well as plans for accelerating investments in connectivity, the Commission intends to produce European strategy papers on quantum technology and blockchain by this summer. Investment in digital skills in the workforce is also a priority, including boosting digital literacy and competences at all levels of education, and ensuring digital skills are developed in early career transitions. Work to improve the legal position of platform/gig workers will be a focus for 2021.

Within this goal is the desire that technology should be trustworthy. The strategic importance of cybersecurity is highlighted, with a push to develop the single market for cybersecurity, including co-operation between the EU Member States on building resilience and cyber-defence, as well as around enforcement. A review of the NIS Directive, which deals with security and resilience of infrastructure for essential services and certain digital services providers, is planned with publication due by the end of 2020.

Perhaps the highest profile initiative to ensure trustworthy tech is the aim of developing "ecosystems of trust" around artificial intelligence tools. The Commission's White Paper on Artificial Intelligence sets out proposals for regulating AI focused on the highest risk uses in the highest risk sectors. The complex issue of how to manage liability for AI tools is also discussed. The proposals in the White Paper are open for public consultation until 19 May 2020, and are considered in more detail in our recent article.

A fair and competitive economy

A significant part of the Commission's objective to ensure a fair and competitive economy revolves around the importance of data as a "key factor of production". The Commission plans to grow the single market for data. The emphasis will not simply be on the flow of data, but on the wide availability of data, which should be easy to access, use and process. As noted above, its detailed proposals have been published in a separate paper on data strategy, as well as wider initiatives highlighted in the digital strategy paper.

The European Data Strategy proposes:

  • legislating on rights to data generated by Internet of Things devices (which are currently decided by contractual negotiation);
  • reviewing intellectual property rights to create clearer rights around data to facilitate optimise data sharing; and
  • creating shared European "data spaces" in certain private sector areas (including manufacturing, mobility, healthcare, energy and financial services), public sector areas and in relation to data to support the EU's Green Deal.

The data strategy paper also discusses the ambition for the EU to become less reliant on cloud services from non-EU providers and to build self-sufficiency.

Antitrust policy continues to be a significant element of ensuring fair and competitive digital markets more generally. The review of the EU competition rules will continue (including adapting the vertical and horizontal agreements block exemptions for digital business), and a sector inquiry will be launched later this year by DG Competition, to consider whether there are obstacles to fair competition in the digital economy. The Commission also flags that it is considering imposing controls on digital platforms "with significant network effects acting as gatekeepers" to ensure that such markets remain contestable and open to competition from innovation and new entrants. This would form part of the proposed new Digital Services Act, expected to start its legislative process towards the end of this year (which will also update EU legislation on e-commerce and platforms more generally). Taxation of the digital economy will also be looked at (taking into account progress at OECD level).

Proposals are expected in the autumn on digital finance, including a fintech action plan, legislation around cryptoassets, and legislation to boost "operational and cyber resilience" in the financial sector.

An open, democratic and sustainable society

The final goal is to ensure that EU values and ethical rules also apply in the online digital sphere, as they would offline. This includes policies on overarching issues such as ensuring plurality of the media, quality content, addressing the threat of external interference in elections and online debate. Acts which are illegal offline should also be policed effectively online. The Digital Services Act (see above) will reconsider regulation of online platforms and information service providers, particularly in relation to their content policies.

The paper calls for a "universally accepted public electronic identity" and plans to issue draft legislation by the end of the year to revise and extend the eIDAS Regulation, which already sets out EU-level rules for electronic identification and trust services.

The Commission also plans to integrate environmental policies with its digital strategy, including initiatives to achieve climate-neutral, energy-efficient and sustainable data centres in the EU, and to support a circular economy for information and communications technology equipment, ensuring that products are designed for durability, maintenance, dismantling, reuse and recycling, and avoiding premature obsolescence. It also plans to develop a digital model of the earth itself to support environmental forecasting and crisis management.

The international angle

The emphasis on EU tech sovereignty (which includes tech self-sufficiency) does not mean that the EU is closed to international trade. However, the Commission takes a strong line that participation in EU digital markets means adherence to EU standards and values. This extends to its approach in relation to international data flows, market access, respect for intellectual property, and so on. A White Paper on how to deal with distortions of the internal market from foreign subsidies is due by the summer.

The Commission clearly takes inspiration from having set the global benchmark for data privacy through the General Data Protection Regulation, and intends to lead in regulation for "a safe and open global internet" and in standardisation for blockchain, supercomputing, quantum technologies, algorithms and data usage.

Osborne Clarke comment

The EU clearly sees itself as a world leader in setting standards for the digital economy, building on its track record of using regulation and enforcement to ensure consumers are protected, while investing to boost the global strength of EU businesses in this sector. There is an ambitious legislative plan associated with the strategy, some of which will be controversial and hard-fought. In particular, it is becoming clear that, while falling short of full sectoral regulation, some activities and some businesses are facing significant regulation within the Technology, Media, and Communications sector, which will impact on commercial strategy and potentially on business models.

UK businesses supplying EU customers will need to comply on an ongoing basis with any new legislation in this area. For UK law, little of what is proposed will be in force and binding in the UK before the expected end of the Brexit transition period on 31 December 2020. However, the EU's strategy is highly relevant to the UK as it will drive UK decisions about whether and in which areas it should seek regulatory alignment with the EU, and where British interests would be better served by divergence.

We can support you in seeking to shape regulation in your sector, understanding its impact on your business, and ensuring compliance with new requirements. If you would like to discuss any of these issues, or the contents of the various digital strategy papers in more detail, please contact one of the authors or your usual Osborne Clarke contact.