The Time is Now – Ready for Competition
There are political debates that can be postponed in the face of the ongoing pandemic. Issues that affect tomorrow's prosperity and Europe's competitiveness are not among them. After the crisis, Europe finally needs concepts that show how we envision our "third way" in the digital domain vis-à-vis the US and China. Regulatory-wise, Europe is a superpower. The legal acts to be adopted in the coming months should be game changers. The 4th European Data Summit dealt with whether Europe is ready for digital competition. From December 1st to 3rd, 2021, 57 experts discussed the shaping of digital democracy in Europe at the Academy of the Konrad Adenauer Foundation e.V. (KAS) and the Representation of the European Commission in Berlin.
Digital Europe is currently defined by two crises: one of market power and one of data protection. Large international technology companies are effortlessly transcending Europe's geographical borders, while at the same time erecting new barriers with their business model. In the context of the Digital Markets Act, experts discussed currently prevailing innovation processes and attested to intellectual stagnation in the start-up scene. The dominance of GAFAM's business models based on data and advertising has made the development of new models monotonous. As a result, innovation is stymied and demonstrate how oligopolistic structures in the data market lead to market failures.
The combination of subscriptions, data, users and advertising - the basic ingredients of many current innovations - creates huge exclusive data spaces. However, these are only available to the digital giants, not to science or the rest of society. For the European institutions to regain their ability to act, market regulation and data protection must finally be enforced. Ultimately, it is about credibility, ensuring fair competition in Europe and effectively protecting citizens' personal rights.
The participants at the summit noted that in the past, discussions had mostly exclusively been held among competition and data protection specialists. There is an urgent need to include perspectives and insights from different disciplines in the discussion about regulating the platform economy. Even though Europe has now taken important steps in regulation and there is positive momentum to address some of the problems of the platform economy, especially in the context of finalizing the Digital Markets Act and the Digital Service Act, it also needs to maintain appropriate resources for its enforcement. There needs to be effective enforcement of the General Data Protection Regulation against the digital giants and clear-cut rules that include structural presumptions. That means the reintroduction of structural presumptions to preserve fair competition, i.e. enforcement away from the “more economic approach.”
Designing Data Trusts – A Purpose-based Approach
As in previous years, the Summit included the presentation of a new academic study. The study, “Designing Data Trusts” commissioned by KAS, concluded that existing regulation is not sufficient to make data trustees in the online sector, such as PIMS, data trustees in the medical sector or in the mobility sector, functional. The study called for a move to purpose-based regulation that gives data trustees the legal framework they need to solve the problems they are being considered to solve.
The second day was opened by one of the most exciting discussions of the Summit on the need for reform of the GDPR. It was mainly about the one-size-fits-all approach, outdated legal paradigms, and unintended effects of the GDPR. The discussion did not provide the impression that the European Commission would undertake reform efforts in the foreseeable future, although these are urgently needed according to the experts that took part in the drafting of the GDPR. Another topic was the GDPR consultation in the United Kingdom, which has been observed with great attention in Europe.
Using illustrative practical examples, such as “real-time bidding” (RTB), breaches of the GDPR were clearly illustrated. The “cross-usage” of personal data by the large digital corporations is still an unresolved problem and contradicts the existing GDPR.
Data Governance Act
In addition to the Digital Markets Act and the GDPR, the Data Governance Act (DGA) was the third major topic. Instead of reacting to problems, with the DGA the EU is increasingly focusing on proactive legislation to create framework conditions for the emergence of future data ecosystems. So-called data intermediaries play a special role, as they enable improved control, portability and transparency in the use of data. Data intermediaries are considered to be a necessary “soft infrastructure” that should stimulate future data sharing and advance the European vision of fair data markets. The so-called “soft infrastructure” comprises standardized functional, legal, technical, and operational agreements that enable data sharing in practice. The market, however must ultimately decide whether neutral data intermediaries are met with acceptance among citizens and undertakings.
As a horizontal legal instrument, the DGA fits into a number of other legal acts of the EU. Summit participants agreed that further complementary legal acts are needed for data intermediaries to play their full role. The Data Governance Act would be the basis for future European Data Spaces, each of which would be governed by sectoral regulations. The developments at Gaia-X are closely related to these foundations.
It was emphasized that intermediaries (or protocols such as the Ocean Protocol) would play an important role in creating future data ecosystems. They could take on gatekeeper functions and reduce dependencies on large players. A new view of interconnected networks other than the classic model of data processing in a silo (without knowing what is happening inside) is essential. This would involve strengthening smaller players in the data economy and driving interoperability. Since data intermediaries are a primarily European phenomenon, there is a chance that Europe could become a global pioneer in creating fair ecosystems. The Catena-X initiative was presented as a successful real-world example: moving away from monetizing data to creating more value in use cases.
Data play an essential role in managing the pandemic. Governments are using it to make decisions, civil society organizations are contributing open data, and individuals are voluntarily sharing their personal data to improve crisis management. Open Data is the booster vaccine of the European economy - the experiences from France and Germany prove this.
What Digital Social Innovation means and how it can be implemented was impressively demonstrated using the example of Taiwan. The basis for this is the lived radical transparency of the administration. The Taiwanese authorities offer citizens a view into the inner workings of the administration with real-time data. Administrative tasks that an administration can no longer handle on its own, i.e. in a crisis due to limited resources are solved jointly through transparency and citizen participation. One example of this is the privacy-friendly corona contact tracing process, which takes an average of 24 seconds in Taiwan. The idea of “radical accountability” goes beyond open data and freedom of information. It is about sharing the thought process of decisions at the moment when the answer is not known. This requires trust.
The third day of the event focused on the question if gatekeepers should be allowed to combine data (Article 5 DMA) and the upcoming Data Act. The Data Act will be unveiled on February 23rd, 2022, and expectations around data access, interoperability and competition issues in the cloud area are high.
The lack of access to relevant data held by companies often hinders the ability of government agencies to deliver evidence-based and effective policy. Business to Government (B2G) data sharing and in this context, ways and options for increased collaboration between the private sector and governments were discussed. The goal should be sustainable solutions - was the tenor of the discussion. In other words, maintaining voluntary cooperation, while introducing a framework that regulates how cooperation takes place. There is a need for clearly defined public interest cases (for legal certainty), adequate compensation, no crowding out of private sector initiatives in data analytics, and safeguards (for example, security and privacy). Effective B2G regulation should focus on the predominant areas of application in cities and municipalities and include requirements for processing anonymized data.
Another insightful discussion dealt with the area of Business to Business Data sharing (B2B). There was agreement among the speakers that data sharing in those situation relates to a heterogeneous landscape. This panorama goes from the IoT context to innovation based on the repurposing of data; to data access and use for fostering AI innovation and the arrival of monopolization differences arising from data accumulation. The EU legislature should consider such heterogeneity in any potential regulatory intervention. Likewise, any regulatory intervention at the EU level should have a clear goal orientation; it should be led by a solid conceptualization exercise and take into account third-party rights. Furthermore, addressing third-party rights in any potential horizontal regulatory intervention should carefully consider interfaces with data protection, intellectual property rights, and parallel access regimes. All in all, any tentative European regulatory intervention in the B2B relationship that aims at fostering data sharing should take a broader, rather than a narrow view. This means it is time to think big.
Below you will find the recording of the three livestreams as well as all individual videos in our YouTube playlist "European Data Summit 2021".
Playlist "European Data Summit 2021"
About this series
The Konrad-Adenauer-Stiftung, its educational institutions, centres and foreign offices, offer several thousand events on various subjects each year. We provide up to date and exclusive reports on selected conferences, events and symposia at www.kas.de. In addition to a summary of the contents, you can also find additional material such as pictures, speeches, videos or audio clips.