The European Union has experienced major advancements in digital policy during these last years, especially since the upsurge of the COVID-19 pandemic in 2020. The large list of initiatives has growing over time. However, 2024 remains a critical year, as it will mean the renewal of the mandate of the European Commission and the political elections at the European Parliament. Some initiatives will need to be wrapped up soon, and others will need to surpass the potential changes that may take place in terms of political priorities and policy approaches to digital policy.
A recapitulation of initiatives in last years
From a regulatory perspective, several developments have taken place. The EU Chips Act, which entered into force in September 2023, aims to bolster Europe’s competitiveness and resilience in semiconductor technologies and applications, and help achieve both the digital and green transition. The Data Act, which clarifies who can create value from data and under which conditions, and the Data Governance Act, which creates the processes and structures to facilitate data. The Regulation on electronic identification and trust services for electronic transactions in the internal market (eIDAS Regulation), which ensures that people and businesses can use their own national electronic identification schemes (eIDs) to access public services available online in other EU countries, and creates a European internal market for trust services by ensuring that they will work across borders and have the same legal status as their traditional paper based equivalents. Also, the AI Act proposal, in which the Council and the Parliament achieved to strike a deal on how to regulate Artificial Intelligence. Also, the Digital Services Act and the Digital Markets Act were highly relevant files. Digital policy does not limit to these examples, as there are many others.
From an industrial policy perspective, the European Commission has developed and deepened several workstreams. Industrial Alliances have targeted digital transformation under the European Alliance for Industrial Data, Edge and Cloud, which has the twin objectives of strengthening the position of EU industry on cloud and edge technologies and meeting the needs of EU businesses and public administrations that process sensitive categories of data; the Industrial Alliance for Processors and Semiconductor Technologies will call actors of the electronics value chain in the EU, including academia, research and technology organizations, but also users, to join forces to maintain and boost the competitiveness in this sector in the EU; and the European Raw Materials Alliance, which aim to build strategic autonomy for Europe’s rare earth and magnet value chains, and aims to identify dependencies on third countries’ ownership of raw materials that are critical for technological development and uptake.
The instrument of IPCEIs (Important Projects of Common European Interest) have also touched upon technological assets, such as the IPCEI on Microelectronics, being the first launched in 2018, and the second in 2023. The second IPCEI in the field of Microelectronics, including communication technologies (IPCEI ME/CT) aims to create innovative microelectronics and communication solutions, and develop energy-efficient and resource-saving electronics systems and manufacturing methods. The other IPCEI is on Next Generation Cloud Infrastructure and Services (CIS), which concerns the development of the first interoperable and openly accessible European data processing ecosystem, the multi-provider cloud to edge continuum. It will develop data processing capabilities, and software and data sharing tools that enable federated, energy-efficient and trustworthy cloud and edge distributed data processing technologies and related services.
The Recovery and Resilience Funds (RRF) helped increase the number of commitments to digital policy. The digital pillar was one of the two main areas of investment, jointly with the climate pillar. By law, the digital pillar needed to be the recipient of at least 20% of the total funds allocated to each Member State. Official data shows that most funding has been given to fostering e-government and digital services in the public sector, which has received 37% out of the total of digital-oriented funding across Member States. The following areas, by order of allocated funding, have been digitalization of businesses (19% of the funding allocated to the digital transition have been given to this area), human capital in digitalization (18%), connectivity (13%), digital capacities and deployment of advanced technologies (11%), and digital-related measures in research, development and innovation (3%).
Jointly with regulation and industrial policy, a third layer of high relevance is the foreign policy on technology. Technology has become an asset of foreign policy and a relevant topic discussion in multilateral and “minilateral” fora. Two main frameworks help explain how the EU might push digital policy as part of the global discussions.
First, the Global Gateway, launched in December 2021, which is the EU major investment plan in infrastructure development with third countries, puts the digital pillar as its first priority. Second, bilateral partnerships play a major role in how the EU defines its global governance of technology policy. It is the case of the EU-US Trade and Technology Council, the EU-India Trade and Technology Council (with the increasing role of India as a technological powerhouse and policy shaper of global discussions in a large array of topics, as the G20 Presidency in 2023 has shown), the Digital Partnership Agreements with Japan, Singapore and South Korea, the Digital Alliance with Latin America and the Caribbean, and the Digital Agendas with the African continent – either through the African Union or with specific countries – and Western Balkans.
Challenges in 2024
The year 2024 is surrounded by a key political element: the elections at the European Parliament and the subsequent renewal of the European Commission’s high-level members, mandates and political priorities. Technology was not at the center of the beginning of the current mandate in 2019, as it may be deducted from the inaugural speech from President of the European Commission Ursula von der Leyen. However, it has become a central element throughout the mandate.
In the upcoming change that will take place in 2024, technology policy is expected to be on top of the priority issues that will make up the list of strategic policy areas in the coming years until 2029. While it is still unclear which will be the specific work program and deliverables, there are some aspects that have become emergent in these last years and may represent a window of opportunity and action.
First, while emerging and disruptive technologies such as deep technologies have been an area of work during this mandate, still further actions are needed. The New European Innovation Agenda, adopted in July 2022, aims to position Europe at the forefront of the new wave of deep tech innovation and start-ups. It will help Europe to develop new technologies to address the most pressing societal challenges, and to bring them on the market. Some flagship initiatives include funding scale-ups, enabling innovation through experimentation spaces and public procurement, accelerate innovation ecosystems, promote measures to foster, and attract and retain talent. Still, a greater amount of funding should be devoted to the research side in deep technologies. Deep tech venture capital entities tend to be incentivized to invest in the development side of the R&D (because it is the most proximate pathways towards market delivery), but not in the research dimension (especially in an area such as deep technologies, that take longer to deliver to the market, pose high uncertainty on the return of investments, and imply high capital intensity).
Second, foundation models on Artificial Intelligence have received attention in the final provisional agreement on the AI Act. Specific rules have been agreed for foundation models, large systems capable to competently perform a wide range of distinctive tasks, such as generating video, text, images, conversing in lateral language, computing, or generating computer code. The provisional agreement provides that foundation models must comply with specific transparency obligations before they are placed in the market. A stricter regime was introduced for ‘high impact’ foundation models. These are foundation models trained with large amount of data and with advanced complexity, capabilities, and performance well above the average, which can disseminate systemic risks along the value chain. However, further assessments on a case by case basis should be carried out to ensure that the whole reality of foundation models are properly covered by any regulation that may be approved or enter into force in coming years.
Third, the digitalization of SMEs is a critical issue. As most country reports drawn from Digital Economy and Society Index (DESI) from 2014 to 2022 show, SMEs represent the largest bulk of the economy in most Member States. However, their level of digitalization tends to be low and, when it is the case, the level tends to be considered as basic.
The focus of Europe’s performance on digitalization through the Digital Decade and the specific country strategic roadmaps that will be published from 2023 onwards is another area to be further deepened. The cooperation mechanism that was launched aims to measure progress towards each of the 2030 targets, provide an annual report on the state of the Digital Decade, release roadmaps by country, and implement multi-country projects, as the European Digital Infrastructure Consortium. While the first three deliverables are needed instruments to track indicators and measure progress, the fourth policy area on multi-country projects remains a highly important issue. Concretely, these projects, that are already taking place, should deepen the amount of funding, the quantity of stakeholders, and the inclusion of actors from a larger number of Member States across the continent, in order to ensure proportionality and equality, in the areas of investment that have been identified, namely data infrastructure, low-power processors, 5G communication, high-performance computing, secure quantum communication, public administration, blockchain, digital innovation hubs, digital skills and cybersecurity.
In 2024, the focus will be both on the internal market and on the external challenges. The European Commission proposed in the summer of 2023 the first-of-its-kind Economic Security Strategy, which aims to address the economic security risks derived from certain economic flows and activities that may remain vulnerable or threatened in the current scenario of geopolitical tensions and accelerated technological development. The strategy is based on a three-pillar approach, or three Ps: promotion of the EU’s economic base and competitiveness; protection against risks; and partnership with countries with shared concerns and interests. The four areas that require risk assessment are: resilience of supply chains, including energy security; physical and cyber-security of critical infrastructure; technology security and leakage; and weaponization of economic dependencies and coercion.
Concretely, one of the first deliverables has been the list proposal on critical technologies by the European Commission, which encourages Member States to provide their risk assessments and lead to a collective work to determine which proportionate and precise measures should be taken to promote, protect and partner in specific technology areas. The goal is two-fold: to reduce dependencies from third actors whose supply chain and political security may be of high-risk, and to promote a diversification of strategic assets across the Union and with trusted partners.
However, two main challenges arise. First, out of this list proposal, which contains 10 technology areas, some specific technologies have not been included, such as Generative AI. Second, the European Commission’s approach to de-risking (and which is the core idea of this list on critical technologies) may prove to be complex to implement in specific technologies, whose developments are either unknown in some applications or whose evolution is too quickly to catch up every Member States’ risk assessment on a yearly basis.
Finally, another challenge for 2024 is the adaptation of foreign policy instruments and the EU’s external action to technology policy. So far, the EU has mostly addressed this issue by means of bilateral partnerships with specific countries or organizations. However, the main challenge will be how the EU plugs into global fora where technology policy is being discussed with a leading role, or at least a risk manager or peer role. The Global Digital Compact that will be agreed upon in September 2024 at the helm of the United Nations General Assembly is one of the key portfolios to keep track on.