Europe’s digital single market needs a change of direction

The digital single market has been one of the EU’s key instruments for strengthening economic integration. Its aim has been to realise the four freedoms – the free movement of services, goods, capital and people – yet none of these has been fully achieved. 

Progress is challenging because the EU functions more as an alliance than a federation. Many decisions require unanimity among member states. New laws have been introduced, particularly on digital services, but now, ten years after the launch of the single market strategy, it is clear that further efforts are needed. 

Barriers remain to the movement of data, services and EU citizens’ work, study and business activities across borders. Advancing the digital single market is crucial for the EU’s internal cohesion and competitiveness in relation to other major economies. Fully realised common markets would bring the EU significant benefits from economies of scale and scope – advantages that would naturally extend to Finland and Finnish businesses. 

Spotlight on difficulties in working or transacting across member states 

The recently published People-first Playbook by MyData Global, an organisation advocating for individuals’ control over their own data, analyses the functioning of the digital single market from the perspective of five groups: 

• freelancers 

• platform workers 

• chronic patients 

• students 

• consumers 

The study illustrates where the digital single market breaks down in their daily lives – when it becomes difficult to work or operate across borders, for example by accessing services in another member state or offering their own services there. Sitra has funded the study. 

It uses fictional examples to highlight these challenges: 

• Anna, a graphic designer, works as a freelancer for clients in several EU countries and must complete a separate KYC (Know Your Customer) process for each. This involves verifying identity and address, providing business details and tax ID, and sometimes background checks. Anna repeats the same process with different clients, creating a heavy administrative burden. 

• A platform worker delivering food in different countries and via different apps does not know why their income fluctuates or why they lost access to orders. Their ratings and work history do not transfer between platforms. In practice, data such as reviews and work history do not move across platforms, and there is no unified digital identity accepted everywhere. This structural gap in the single market hampers mobility and rights. 

• Maria, a patient with a chronic illness, travels for treatment to another EU country. Her prescriptions and lab results do not transfer automatically because systems are incompatible. 

Five-point action plan 

The study proposes a five-point strategy to make it easier for businesses and individuals to operate in multiple member states: 

1. Harmonise and simplify legislation. This would help businesses operate across borders without unnecessary paperwork, where data transfer (GDPR), unified VAT rules and common identification methods are key. The Commission aims to reduce administrative burdens by 25% for businesses and 35% for SMEs during the current term. Several legislative initiatives are underway, such as the Digital Omnibus (simplifying digital regulation) and the 28th Legal Regime, whose implementation will shape the EU’s future. 

2. Develop digital systems and regulatory technologies so that data, identifiers and rights can move securely. For example, the EUDI Wallet could be expanded to allow people to manage their own data more easily. The Once-Only Technical System could be used for transferring health and education data. Common rules and technical solutions (API standards) are needed to make consent and data transfer simple and safe. 

3. Create practical tools to help individuals manage and transfer their own data and permissions more easily. 

4. Ensure transparency and trust in data processing and decision-making. Handling personal data and its movement must be easy to understand and verify. Everyone has the right to know the basis of data flows, algorithms and automated decisions. 

5. Design digital services to be more human-centred. Every new service and regulatory solution should be designed with user experience in mind, not only technical or administrative efficiency. 

Sitra is planning follow-up work to address concrete proposals for resolving the biggest bottlenecks in Europe’s digital single market. 

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