Monday, April 24, 2017


EC calls on member states to help unleash €415bn hidden in Europe’s Data Economy



EU chief alerts for need to allow data to “flow freely between locations, across borders and within a single data space”. Data centres labeled as key for future growth.

The European Commission (EC) has today launched a public consultation aimed at member states and stakeholders in an attempt to shape the future policy agenda of the EU.

The consultation has been launched as part of the commission’s Digital Single Market strategy which seeks to take down barriers to digitalisation across the EU and modernise the IT segment of the pan-continental organisation and its 28 member states.

The EC estimates the EU could benefit from an extra €415bn a year if it adopts the right strategy to absorb the opportunities linked to the digital age economy.

According to the EC, the EU data economy was estimated at €272bn in 2015 (CAGR of 5.6%) and could employ 7.4 million people by 2020.

With that in mind, Andrus Ansip, VP for the Digital Single Market, today launched the “Building the European Data Economy” initiative consisting of a communication document and a staff working document.

In the staff working document, the EC suggests that Europe is not tapping into the potential of data for business, research and innovation purposes.

In the document it reads: “Part of building a vibrant European Data Economy is to enable providers and users of data-driven services, such as cloud computing, to benefit from a single market that does not restrict the flow of data across borders.”

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The organisation wants now to address “unjustified restrictions” to the free movement of data across borders as well as several legal uncertainties.

In the ‘communication’ document, the EC outlines policy and legal solutions to build Europe’s data economy.

The Commission also launched two public consultations and a debate with member states and stakeholders to define the next steps.

Ansip said: “Data should be able to flow freely between locations, across borders and within a single data space. In Europe, data flow and data access are often held up by localisation rules or other technical and legal barriers.

“If we want our data economy to produce growth and jobs, data needs to be used. But to be used, it also needs to be available and analysed.

“We need a coordinated and pan-European approach to make the most of data opportunities, building on strong EU rules to protect personal data and privacy.”

In order to make the most of data for the European economy, the Commission said it will engage in structured dialogues with member states and stakeholders to discuss the proportionality of data localisation restrictions.

“The goal is also to collect further evidence on the nature of these restrictions and their impact on businesses, especially SMEs and startups, and public sector organisations,” the EC said in a statement.

Number of data localisation measures implemented globally and intra-European Union (ECIPE, Digital Trade Estimates, 2016)

In addition, the commission said it will launch enforcement actions and, if necessary, take further initiatives to address unjustified or disproportionate data location restrictions.

The commission has also looked at legal uncertainties created by emerging issues in the data economy and seeks views on possible policy and legal responses regarding data access and transfer, liability related to data-based products and services, and data portability.

Elżbieta Bieńkowska, Commissioner in charge of Internal Market, Industry, Entrepreneurship and SMEs, said: “To ensure that Europe is successful in the new era of the industrial economy, we need a solid and predictable framework for data flow within the Single Market.

“Clear data access, security and liability rules are key for European companies, SMEs and start-ups to fully grasp the growth potential of the Internet of Things.

“Instead of building digital borders we should focus on building a European data economy that is fully integrated to and competitive within the global data economy.”

The consultation on building the European data economy will run until 26 April 2017 and feed into the commission’s possible future initiative on the European Data Economy later in 2017.

Reactions from across Europe were mixed with Antony Walker, deputy CEO techUK, saying that the overall Digital Single Market strategy is wrong from the beginning.

He said: “European Member States need to think hard about whether the proposals released today will help then grow their digital economies.

“Unfortunately, Brexit will not shield UK businesses from the negative impact of these proposals. All businesses exporting goods into the EU post-Brexit will need to be compliant.

“EU Member States need to wake up to the fact that the European Commission is getting the Digital Single Market (DSM) strategy wrong and consider the impact of these proposals, and others such as the Copyright proposals and the proposed E-Privacy Regulation on their ambitions to grow their economies in a digital age.”

Walker continued saying that the DSM has “effectively been an exercise” in levelling up regulation rather than in re-thinking what effective and appropriate regulation should look like in a digital age.

He said: “This is a missed opportunity for Europe.”

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EC sees data centres as heart of Data Economy

As data lakes grow, the need to more reliant and safe data centres is also booming all across the union.

The EC says in the staff working document that, in most cases, the level of security of data in electronic format does not depend on its storage location, but rather on the security of the IT infrastructure and strength of the encryption techniques used.

“Ways to achieve secure data storage or processing include removing obstacles to keep data in larger state of the art data centres, which are much less vulnerable to attacks, and enabling crossborder cooperation, i.e. one data centre being the back-up of another located in a different member state.”

The commission continues saying that the free flow of data is a necessary pre-condition to the development of large data centres serving the continent and attracting data business to Europe.

Currently, out of the top 25 public cloud service providers active on the EU market, 17 with headquarters in the US collectively generate 83% of revenues, according to IDC’s Uptake of Cloud in Europe study.

The report has also identified that seven EU-based providers account for 14%. The remaining 3% of revenues are spread across small providers, generally EU based.

Some estimates by the ECIPE show that data centre construction costs may be up to 120% higher and operating costs may also double in some European locations compared to others.

This is, according to the EC, because of higher land, labour and operating costs, such as higher energy prices or increased energy consumption to maintain efficient operating temperatures when located in warmer European regions.

The EU average data centre lifetime cost (excluding land costs and capital costs associated with servers and other equipment)17 is €276.9m.