European Digital Strategy: the right way to unlock European data chains?

By Martina Furlan, 89 Belgium

This year the EU has launched a new European Digital Strategy (EDS), which aims to make Europe a leader in data-driven innovation.

The new strategy presented in February 2020 includes the creation of data spaces underpinned by a European cloud infrastructure (ECI), a Data Strategy (DS), and an Artificial Intelligence (AI) Strategy. The EDS is addressing several concerns of the EU. With its DS, the EU wants to build its single market for data based on a sound legal framework in terms of data protection. By establishing its ECI, the EU intends to reduce its reliance on foreign cloud providers and boost its capacities on the AI front. EU policymakers set out a project that, necessary as it sounds, might face several practical constraints.

Back in 2016, the Commission came up with ECI a project that aims to federate existing and emerging data infrastructure, to provide for high-speed connectivity to transport data, and provide for high-performance computers to process data. Initially designed as European Open Science Cloud, a platform for the research community to access and re-use data cross-borders and scientific disciplines, the ECI will include the public and private sectors as well. With its DS, the Commission wants to open up data and datasets for the common good and unlock the use of data as a power for economic and societal good. It aims to create nine different data spaces, such as: healthcare, Green deal, fintech, energy, manufacturing, mobility, public administration. [1]

The perks of having shared databases are clear: research institutes could work in synergy across countries, and compete on a level playing field. Cloud infrastructure would allow businesses to employ data-intensive technologies, like AI. Unlike before, when the development of AI was an endowment of big companies who own powerful servers, cloud computing allows small businesses and labs to store vast datasets they need to train for developing AI systems on clouds.

The EU faces three main challenges to implement the ECI: addressing the main private cloud providers, getting the industry on board, and providing for solid financial resources.

Competing with the already existing cloud providers is not simple; in fact, we have no technology hyperscalers in the EU. The main cloud providers are American and Chinese companies that proved able to exploit economies of scale, with three US firms accounting for 53% of the global market (Amazon Web Service, Microsoft Azure and Google Cloud). [2] Whereas in the US, cloud infrastructure has grown as an initiative by private companies, in China, it did by the action of the central government, which launched an initiative to develop domestic Cloud computing already in 2008. Cloud has ever since been part of its 5-years-long technology policy strategies, which set targets to the use of clouds in its private and public sectors. [3] The EU, however, cannot exert leverage on the same resources as China, as European companies operate in a market-based economy. Yet, the aim of supporting the domestic industry is similar.

The EU ought to decide how to engage with these players, whether it wants to side with them or build its infrastructure from scratch. Presumably, it will create a consortium of existing companies that provide cloud services to support the project. To be financially supported in a manner compliant with EU state-aid rules, the project will need to be of common European interest.

To this aim, the EU needs to get companies on board: businesses that already operate with clouds, businesses that would subscribe to a new cloud infrastructure, and businesses that would agree on exchanging data.

The industry has already invested in data infrastructure over the years. To avoid the risk of duplication, the EU should consider the possibility of co-investing. Furthermore, EU-based companies need to be incentivised to create the hardware and software necessary for shifting from traditional IT environments to new platforms. Their main concern is that a new cloud infrastructure would need to offer a competitive price and the same endowments that other cloud providers are offering: calculation and prediction tools for business intelligence, databases, AI, and the internet of things. Furthermore, since businesses do not rely on single clouds anymore, it is necessary to think of hybrid and multi-cloud landscapes and to equip them with data management tools. Low powered data repositories would provide an added value to the infrastructure, assuming that businesses consider saving energy as one of their priorities. Lastly, businesses should be motivated to create and share open data. The EU ought to cooperate with already existing initiatives, such as the Open Data Initiative.

Such a technology infrastructure requires high investment both in building and keeping up with state of the art. In examining financial resources foreseen so far, the feeling is that the Commission counted its chickens before they hatched. The Commission estimates the needed investment to implement the ECI at €6.7 billion, and adds that €2 billion under the Horizon 2020 funding scheme will be allocated as well. The estimation of the required additional public and private investment is €4.7 billion in 5 years. I believe that the Commission should have advanced a more ambitious investment plan, especially for the following reason: the future of the Horizon program is not as bright as one might hope. During the ongoing negotiations on the Multiannual Financial Framework, the Commission suggested a budget for the new Horizon Europe of €100 billion. Yet, even if the Council achieved consensus on an EU budget of 1,075% of national GDP, the future Horizon programme would still face a cut of €2,9 billion. [4] The situation is also worsened by COVID-19, as a sensible part of the post-pandemic economic recovery measures might rely on funding taken from the EU budget at the expense of the Horizon programme. In this case, a reassessment of the EU priorities is recommendable to European leaders: digital infrastructure should be at the top of the list.

Setting up a technology infrastructure at a time when tech hyperscalers are advancing at a fast pace is not easy. Nevertheless, the EU Digital Strategy is promising. By leveraging on its scientific capital and scattered capabilities, the EU can shape its cloud industry. Once the EU defines how to engage with its stakeholders and endows the strategy with sound resources, the EDS will serve its purpose – making the EU a global digital leader.

Martina Furlan is a master student of European Affairs at the University of Ljubljana. She is currently working in Brussels as a trainee and is interested in topics at the confluence of EU external relations, security, and technology.


[1] European Commission.(2020). The European Digital Strategy. Available at https://ec.europa.eu /digital-single-market/en/content/european-digital-strategy

[2] Global cloud market up 37%, with channels creating new growth engine. (2019, October 30). Canalys. Available at https://www.canalys.com/newsroom/global-cloud-market-Q3-2019?ctid=84 9-9938406ec679884a876039f0ebce09b6

[3] Zhu, J. (2014). China Cloud Rising. Heidelberg: Springer.

[4] Zubascu, F. (2020, February 25). EU budget delay leaves parts of Horizon Europe in limbo. Science Business. Available at https://sciencebusiness.net/news/eu-budget-delay-leaves-parts- horizon-europe-limbo

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