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07.2

Policy

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Measuring policy focus in Europe

Data challenge accepted

Last year's report identified a number of opportunities for improved collaboration between policymakers and the European tech community. This year's report explores change in these areas, based on the results of the State of European Tech Survey as well as the POLITICO Pro Intelligence's analysis of the activities of the European Parliament (the legislative branch of the European Union). The European Parliament is a useful proxy for actual policy outcomes that may have a nearer-term impact on the European tech ecosystem, as it represents the "end result" of the European policy agenda set by the European Commission.

For reference, the table below describes the type of data used throughout the analysis shared by POLITICO Europe. Activities and press releases provide a sense of what is being talked about and the responses to those discussions. Legislative documents, on the other hand, reveal what makes it into draft policies.

Overview of European Parliament data

Note:
We look at the number of keyword occurrences relating to a set of selected technology-related topics in the European Parliament.

Topics and corresponding search terms

Unsurprisingly, Covid-19 has dominated much of the European Parliament's attention in 2020 and has dwarfed almost every other topic over the past year. Looking beyond Covid-19, the Green Deal has also been discussed prominently in European Parliament activities and press releases. The topic of US Big Tech companies remains high on the discussion agenda, still ranking above Brexit in terms of volume of mentions, despite the imminent exit of the UK from the European Union.

Top 20 key topics in European Parliament by number of mentions in activities and press releases

Legend

  • 2020
  • 2019
Note:
This data looks at the number of keyword occurrences related to key tech topics in European Parliament activities and press releases. Data as of 10 November 2020.

The shifting focus of the new European Parliament administration is reflected in the downward trend of keyword occurrences around US Big Tech companies and Brexit, suggesting that these topics have slipped down the policy agenda.

Number of mentions of US Big Tech companies or Brexit in European Parliament activities and press releases per year

Legend

  • Brexit
  • US Big Tech companies
Note:
This data looks at the number of keyword occurrences related to Brexit and US Big Tech companies in European Parliament activities and press releases. Data as of 10 November 2020.

In 2020, Europe's digital transformation strategy has become a point of focus. To this end, the European Commission is working across three key areas: technology, a competitive and fair digital economy, and lastly, an open, democratic and sustainable society. Data privacy discussions have decreased following the implementation of the GDPR in May 2018, and the focus has shifted to artificial intelligence, with the regulatory framework on ethical AI in the making.

Number of mentions of Digital Transformation, Artificial Intelligence or GDPR in European Parliament activities and press releases per year

Legend

  • Digital Transformation
  • Data Privacy / GDPR
  • Artificial Intelligence
Note:
This data looks at the number of keyword occurrences related to Digital Transformation, Artificial Intelligence and Data privacy / GDPR in European Parliament activities and press releases. Data as of 10 November 2020.

For Europe, achieving a global leadership on AI will require pulling all necessary levers to unleash innovation-led growth, ease transitions in the skillset of the workforce and foster technology adoption and diffusion.

While China and the United States have been moving forward with determination on the AI front, Europe has the resources at its disposal to keep pace. The continent boasts cutting-edge education and research capabilities; it has more professional developers than the US and is home to 1/3 of high-quality research publications on AI. For Europe, achieving a global leadership on AI will require pulling all necessary levers to unleash innovation-led growth, ease transitions in the skillset of the workforce and foster technology adoption and diffusion. We estimate that if only 9 European “digital front-runners” countries were to adopt AI at scale, the potential economic impact could be as high as €42 billion annually (or 1.4% of GDP).

Eric Hazan

McKinsey

Senior Partner

After much talk about US Big Tech Companies over the past five years, the European Commission is expected to deliver a new piece of regulation by the end of 2020 as a response to its concerns about building a competitive and fair digital economy. The newly-christened Digital Services Act ("DSA") regulation is expected to be one of the largest regulatory overhauls of the digital economy. The EU is preparing a "blacklist of behaviours" and is expected to narrow down the use that "gatekeepers" can make of the data they collect, as well as limit the preferential treatment their own services enjoy on their sites or platforms. Unsurprisingly, the discussions around the DSA are now picking up steam in European Parliament activities and press releases.

Number of mentions of the DSA and US Big Tech Companies in European Parliament activities and press releases per year

Legend

  • 2016
  • 2017
  • 2018
  • 2019
  • 2020
Note:
This data looks at the number of keyword occurrences related to US Big Tech companies and the DSA in European Parliament activities and press releases. Data as of 10 November 2020.

The administration's new focus on sustainability and, more specifically, climate, is noteworthy. The Commission's "European Green Deal" aims to make the European Union the first continent to become climate neutral by 2050 and is considered by European Commission President, Ursula von der Leyen, to be a European "moonshot". The scale of the projected investment needed to finance the Green Deal - more than €1 trillion - has the potential to be an important catalyst for purpose-driven European tech entrepreneurs focused on tackling climate issues.

Number of mentions of the Green Deal in European Parliament activities and press releases per year

Note:
This data looks at the number of keyword occurrences related to the Green Deal in European Parliament activities and press releases. Data as of 10 November 2020.

Under the Juncker Commission, 30 legislative proposals on the Digital Single Market were made, of which 28 have been agreed. The two proposals that have not yet been ratified pertain to "strengthening trust" and the EU's capacity to respond to cyberattacks. The importance of moving forward on these two proposals is underpinned by responses to the State of European Tech survey. When asked to identify up to three areas requiring urgent attention from regulators given their potential impact on society, disinformation, cybersecurity and data privacy were all ranked highly by respondents. Interestingly, the role of Big Tech companies also featured high amongst survey respondents.

In your opinion, which areas in tech require urgent attention from regulators as they are likely to be most impactful for society (in a good or bad way) ?

Source:
Note:
Respondents were able to select up to three responses for this question.

The EU should go beyond patching existing frameworks and bolstering effective enforcement. The increased use of AI systems, in particular, suggests that the EU’s regulatory vision must expand to include tech’s impact on discrimination and socioeconomic inequities. Rather than retreating or “sheltering in place,” now is the moment for the EU to translate the "new possible" of a post-pandemic world to its digital ambitions.

Corinne Cath-Speth

Oxford Internet Institute

DPhil student

The huge increase in mentions of keywords related to disinformation is a reflection of the growing concern around the topic. This policy area is likely to form part of the third pillar of the EU's digital transformation strategy to protect an open, democratic and sustainable society, given the perceived threat of coordinated disinformation activities to democratic institutions.

Number of mentions of Disinformation / Deepfakes in European Parliament activities and press releases per year

Note:
This data looks at the number of keyword occurrences related to Disinformation / Deepfakes in European Parliament activities and press releases. Data as of 10 November 2020.

An analysis of the top 20 topics across the 2015-2019 and 2020 periods shines a light on the two administrations' differing priorities. Notably, mentions of the Digital Single Market have faded quickly. These changes will continue to materialise over the following year, especially if and when the focus can move on from responding to the Covid-19 pandemic.

Top 20 key topics in European Parliament activities and press releases, 2015-2019 versus 2020

Note:
This data looks at the number of keyword occurrences related to key tech topics in European Parliament activities and press releases. Data as of 10 November 2020.

This year, the survey included specific questions to gather targeted and actionable insights from respondents on the European Commission's strategy. One area of focus was the upcoming Research and Innovation Framework (Horizon Europe). This programme is meant to deliver up to €100B of spending on Research and Innovation in the European Union and set to launch in 2021. Despite its scale and potential impact, almost two-thirds (65%) of survey respondents are unaware of its existence. Amongst founder respondents to the survey, only one in three (37%) said they were aware of the programme, though they are one of the most important intended recipient groups of the huge-scale spending plan.

Are you aware of the upcoming research and innovation framework program of the European Commission, Horizon Europe?

Source:

Legend

  • Yes
  • No

The survey also asked respondents to optionally provide feedback for the European Commission on how to improve the efficacy of their programmes and yielded more than 670 responses. A keyword analysis of these responses highlights that eliminating perceived bureaucracy and complexity from the process to access Research & Innovation funding is by far the most frequently recommended improvement. The second most recommended step is to inform and communicate around these programmes more effectively. Additionally, widening access to funding is another common recommendation that relates, in particular, to tender requirements that are perceived to exclude many potential participants. Finally, it is worth noting that a meaningful number of survey respondents felt that the evaluation process could benefit from having a more diverse group of experts and investment professionals.

What would you recommend the European Commission do to improve the efficiency and effectiveness of its research and innovation programs?

Source:
Note:
Based on text analysis of 670 respondents - some respondents provided multiple recommendations for this question. Please interpret the data with this in mind.

Generally: we need better explanations.

I am informing myself about a lot of the regulatory pieces, and I know about most of it. But you have to really search for it, it is not like you are getting the information easily. Also, I feel that the start-up economy is not a top priority of the EU. For example, Macron is doing a lot to boost France's start-up economy and also publicly. Not a lot of high-level European politicians are actively lobbying or even publicly caring about startups (except for the ones who can almost be compared to corporates regarding their size).

Anonymous Respondent (SME, Germany)

Similarly, the Digital Single Market ("DSM"), a key priority for the Juncker Commission (2014-2019) to drive a digitally connected Europe has become less of a priority given a series of measures are either now in force or in the process of being implemented.

Number of mentions of the DSM in European Parliament activities and press releases per year

Note:
This data looks at the number of keyword occurrences related to the DSM in European Parliament activities and press releases.

The EU data economy will not flourish under the present DSM directive.

EU only has a small share of the world data economy and the EU is the only jurisdiction where text and data mining is an act relevant to copyright. In the US and Asia, copyright protects the artistic or literary form, not the information embedded in works. The EU commission should change the DSM directive to allow text and data mining, that is extracting information from works, without the present restrictions. The EU data economy will not flourish under the present DSM directive and this makes commercialisation of research results difficult in Europe. Startups based on EU funded research involving data science have to move to the US or Asia.

Anonymous Respondent (Public sector, Finland)

The EU took a series of measures designed to help build a DSM such as the free flow of non-personal data, digital content and services, copyright, platform-to-business relations, and geo-blocking. The survey asked respondents to state whether they agreed or not that these measures had been positive overall for the growth of tech startups and scaleups in Europe. The majority of respondents agree these measures have had a positive impact overall, while only 5% of total respondents disagreed. About 40% neither agreed nor disagreed.

Would you say that overall, these measures are positive for the growth of tech start-ups and scale-ups in Europe?

Source:

Legend

  • Agree
  • Neither
  • Disagree

Overlaying the analysis of European Parliament activities and press releases with the focus areas of legislative documentation provides a proxy for actual policy outcomes. GDPR and the DSM are more prevalent, while Disinformation and Deepfakes are much less frequently mentioned in legislative documents. Digital Transformation and the Green Deal feature high on the list.

Note:
This data looks at the number of keyword occurrences of key tech-related issues in European Parliament legislation. Data as of 10 November 2020.

From Founders and tech company employees to VCs, disinformation is cited most frequently by survey respondents as an area requiring urgent attention, showing the urgency to devote attention to this particular challenge. We can expect to see this become more of a focus point for the European Commission with the announcement in September of an extensive review of the “Code of Practice” aimed at fighting the spread of disinformation online, first introduced in 2018. The Commission agrees more efforts are needed to address the current shortcomings of these self-regulatory measures.

In your opinion, which areas in tech require urgent attention from regulators as they are likely to be most impactful for society (in a good or bad way) ? Top choice by occupation

Source:
Note:
Respondents were able to select three responses for this question and we are presenting their top choice by occupation.

The areas requiring urgent attention varied according to the home country of the survey respondents. Disinformation ranked top in most countries, though artificial intelligence and Big Tech dominance also topped the ranks in certain countries.

In your opinion, which areas in tech require urgent attention from regulators as they are likely to be most impactful for society (in a good or bad way)?

Source:

Legend

Note:
Respondents were able to select up to three responses for this question.

There is clearly still work to be done to build bridges between European start-ups and scale-ups and European policymakers. The number of survey respondents agreeing that the perspectives of start-ups and scale-ups are being heard by European policymakers is still significantly outweighed by the number that disagree. Founders are nearly two times as likely to disagree with the statement than they are to agree.

The concerns and perspectives of start-ups and scale-ups are being heard by European policymakers

Source:

Legend

  • Agree
  • Disagree

There’s a way to go until Europe has the right environment to keep pace with tech elsewhere in the world, and more needs to be done by regulators and policymakers to protect competitive dynamics and help foster European tech champions.

There are definitely reasons for optimism, not least as the European tech ecosystem is still evolving and improving in a number of ways. For one, people are moving back from established tech businesses in the USA and bringing great skills and strong experience with them. And, funding opportunities are improving; while there's still far more value being created in the US and China than in Europe, investors from the USA and elsewhere are also looking this way. Even during the first half of 2020 when so much was unknown, we saw some impressive investment news coming from European firms. However, there’s a way to go until Europe has the right environment to keep pace with tech elsewhere in the world, and more needs to be done by regulators and policymakers to protect competitive dynamics and help foster European tech champions. In particular, we would welcome greater harmonisation of laws and regulations between the Member States of the European Union.

Thomas Plantenga

Vinted

CEO

It is critical that policymakers engage deeply with the ecosystem to understand their needs, and vice versa. The needs of any given European tech start-up differ significantly based on where the company is in its scaling journey. Effective policy understands and addresses these differences. For example, as companies scale, accessing and tapping into the incredible talent pool Europe benefits from becomes very material. As such enabling harmonised and simplified immigration procedures across Europe has the potential to unlock material value for companies. At the earliest stages of a company's journey, incentivising talent to join is crucial and represents another area where regulation could play an important role.

What is one regulatory change that would have a materially positive impact on the prospects of your business?

Source:

Legend

  • Simplified immigration / visa procedures
  • Simplified employment regulations
  • Better taxation of employee stock options
Note:
The x-axis refers to the number of employees in the respondent companies.

The persistence of regulatory fragmentation across Europe is cited by the largest number of respondents across all company sizes when asked to highlight the main regulatory hurdles or issues limiting the growth of startups and scale-ups in Europe compared to other large markets, such as the US and China. Funding limitations and over-regulation generally were also commonly cited by respondents.

To date, what are the main regulatory hurdles or issues limiting the growth of start-ups and scale-ups in Europe compared to other large markets like the US and China?

Source:

Legend

  • <10 employees
  • 11-100 employees
  • > 100 employees
Note:
Respondents were able to select up to 3 responses for this question.

[Europe] should avoid turning a call into Digital Sovereignty into a self-defeating effort to protect European champions, impose data localisation and build a “European” cloud. Its upcoming Digital Services Act should set new standards of responsibility for Big Tech, without hindering European access to new technologies or imposing costs which force ambitious entrepreneurs to flee.

Europe can do tech. Although the Old Continent is often viewed as a digital laggard, running far behind the frontier-pushing United States and Asia, the appearance is deceiving. Start-ups are strengthening. Venture capital is flourishing. Gone are the days when Europe’s “tech” sector largely comprised consumer-oriented e-commerce businesses – often blatant knockoffs of successful US companies. Today, Europe is home to pioneering innovation, led by real successes in fintech and digital health. Looking forward, the continent needs to be careful to avoid jeopardising this success through overregulation or protectionism. It should avoid turning a call into Digital Sovereignty into a self-defeating effort to protect European champions, impose data localisation and build a “European” cloud. Its upcoming Digital Services Act should set new standards of responsibility for Big Tech, without hindering European access to new technologies or imposing costs which force ambitious entrepreneurs to flee.

William Echikson

Centre for European Policy Studies

Associate Senior Research Fellow & Head of Digital Forum