Estimated reading time 16 min

The European data economy is a toothless paper tiger

The European data economy needs concrete measures beyond administrative development and regulation. The limited resources available must be allocated to the genesis of data-based services.


Pirkka Frosti

Leading specialist in data economics and the founder of DLI, Digital Living International Oy


According to studies conducted by IDC analysts, one euro spent on infrastructure will generate a more than sixfold yield in the data economy, for instance in the form of data-based innovations and new services (source: The EU Data Landscape). Europe’s competitiveness is to be found in its value base. There is an option between extremes offered by the USA and China. Europe can explore the data as a proper vehicle for building competitiveness rather than perceiving it as just an additional tool.

The German EU Presidency has just begun and faces multiple challenges. The data economy requires determined development, and the meagre resources available must be used correctly and creatively.

Value-based development of digitisation and leveraging the current base constitute Europe’s competitive advantage

In the data strategy of the European Commission, the value of the data economy in 2025 is estimated at EUR 829 billion. At the end of May, the Commission presented a recovery programme allocating an additional EUR 750 billion to the building of the “Next Generation EU” programme. German Chancellor Angela Merkel and French President Emmanuel Macron are pursuing digitisation as a means of achieving autonomy and growth for Europe.

Can this package of nearly one trillion euros generate permanent growth in Europe? And how much of the annual turnover of the data economy will remain within Europe’s borders?

Europe is the third Little Pig, building his house out of bricks and scolding his carefree brothers.

The societal development promoted by the Commission is characterised by administrative development and regulatory control. This does not motivate enterprises or excite consumers. Europe is the third pig, Practical Pig, the boring pragmatist building his house out of bricks and scolding his carefree brothers. Digitisation is a wind that crumbles structures and represents a challenge for this continent that generates wellbeing out of the sciences and industrial production. We should not seek autonomy in our own cloud infrastructure or in emotion-driven consumer services, because we do not have enough innovation to offer in these areas.

The USA is the undisputed king of creating demand by appealing to emotions, while Asia is the master at producing material goods to satisfy the demand thus created. The internet is geared towards this mechanism. Now the wolf is at the door, and the wind is whistling in the corners. Climate change, gaping social inequalities, a global financial crisis or the impoverishment of the political value base cannot be solved by buying your cat a new pair of shades online. There is a desperate demand for transparency, sustainable economy and equality in the digital world, but no supply. Europe’s strength is in building sustainable, democratic societies, but its paper structures need to be automated, and a completely new market for data as a facilitator of services must be created.

Money should be spent on enabling new, data-based services

Data is not oil, water or oatmeal – that makes services flow smoothly and profitably. To be distributable, data must comply with legislation, market practices and the rights of individuals. New technologies and practices are needed for that distribution.

The examples given in the European data strategy – a benefit of EUR 740 million through automatisation of rail transport or of EUR 5 billion through combating malaria – can only be realised if data can be made shareable, reliable and understandable to both machines and humans. Once this is the case, data can be treated like any tradeable commodity. Data can then be productised and priced, and a functioning market – global data exchanges – can be created. Digital identities and machine-readable rights built on real-world legislation constitute the core that fosters confidence in the data economy and the data market.

New technologies and practices are needed for distributing data.

Europe must build these structures for and on the existing global internet, not in self-contained silos or on isolated platforms. This can only be done by leveraging the existing, decentralised structure of the internet and by promoting open standardisation. The values, expertise and legislation according to which these digital structures are created will determine the ground rules and revenue mechanisms of the data economy. This is Europe’s chance to capitalise on the European and to leverage its financial benefits, assuming that we will spend the EUR 750 billion not by building motorways in forests but by creating the digital structures for distributing data that we now lack.

Sitra and the national spearhead enterprises in their open development community are building the IHAN test bed on the principles of a fair data economy. Finland is already creating the technologies and standards that will be required for generating a European data economy. We aim to put our money where our mouth is, demonstrating how the goals outlined in the European data strategy can be attained in practice, through multi-discipline cooperation. We claim that the ihan.fi test bed developed by Sitra is a response to the challenge laid down in the European data strategy. Humility is not a virtue when you know you have come up with something unique and creative.

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