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Blog Post

Are We Still not Seeing the Forest for the Trees?

October 24, 2016

Eight months ago, GMF released “Seeing the Forests for the Trees: Why the Digital Single Market Matters for Transatlantic Relations,” on the opportunities and challenges for U.S.-EU relations inherent to the Digital Single Market (DSM) strategy. With two rounds of DSM policies now rolled out, the trees seem to have grown larger, obscuring the big picture. The GAFA (Google, Amazon, Facebook and Apple) still seem to loom threateningly over Europe, made more menacing by the anti-trade demonstrations we have seen here in the last weeks. But as Rob Atkinson, founder and president of the Information Technology and Innovation Foundation and the author of one of the essays in our report, told GMF audiences in Brussels last week, the opportunities of transatlantic digital cooperation have never been bigger. How do we change the narrative? How do we build a bridge between the younger transatlantic generation that sees the opportunities in the digital market space and the anti-American, anti-globalization rhetoric that now manifests itself?

The European Union is leading in a number of digital industries, including smart cities and innovative electro-mechanical equipment that gets plugged into the Internet of Things; it also has an impressive concentration of young innovators who excel in such areas like digital design, for example the gaming industry in Central and Eastern Europe. But these successes receive too little recognition in Europe (something ironically the GAFA are trying to change). And, as Atkinson said, they have limited space to grow. Scale is a determining factor for any starting company, especially in the digitalized industry. The DSM, Atkinson argued, can help lift regulatory barriers for start-ups in Europe and help get them to the European market of 500 million customers. This is not a panacea: a Belgian start-up must still work hard to grow beyond its local market, due to both language and culture barriers. A U.S. start-up has immediate potential to reach 300 million customers.

Representing a view from Washington, Atkinson stressed U.S. support for this growth, but pointed to tensions in the objectives that seem to underlie DSM — to build a European digital industry, to digitalize European industry, and to protect consumers, especially personal data. A strategy of “digital assertiveness” can only lead to suboptimal outcomes. Excessive data protection limits data analytics. Protectionism does not help in positioning European industry writ large as a global leader in applying digital technologies to its special strengths.

In addition, the public perception over the past three years on technological innovation has worsened, and stands in stark contrast to the earlier enthusiasm when the GAFAs were considered the wave of the future. And this is on both sides of the Atlantic. President Obama’s recent interview on why innovative technologies like artificial intelligence make now the “best time to be alive” is one example of how political leaders could work to shift public opinion from the risks to the opportunities in the technology pipeline. Data protection and data ownership are concerns to be taken seriously, and are issues the transatlantic politicians and policymakers must wrestle with, but we must ensure they do not impede the enthusiasm and innovation of our young entrepreneurs.