Working session “Role of EU Single Market in the digital economy”, Riga

Distinguished Ministers, dear friends,

Digitalization means industrial revolution. It changes the world faster than any other phenomenon since the beginning of the industrialization. It modifies business models, value chains and networks. Everything that can be digitalized will be digitalized. Digitalization means great opportunities for businesses and public sector.

However, as the digital environment per se is global, this also means that the competition will get tougher and new successful innovation can happen anywhere.
The environment is not only digital by default, it is global by default. And digitalization is accelerating. The logic of the platform economy is “winner takes it all” and if you lose the moment, it definitely is gone. The digital success stories so far have come from the other side of the Atlantic and in future more and more from Asia. The clock is ticking for Europe if we want to keep up with the digital development. Europe has to learn to live with creative destruction and make most of it in order to succeed in the future as well.

We need to understand digitalization in its broader sense. Digitalization (and ICT) is not a separate sector of the economy but rather a new way of doing things - a cross-cutting approach that will be applied in any imaginable sector of the society. Digitalization challenges the current sectoral thinking and we have to make sure that the old sectoral way does not distort or slow down the development of new business models. It has been estimated that in couple of years more than 50 % of all new value creation will be closely linked to digitalization – whatever the sector is. Open data is the new oil. Therefore we need to make sure that European industries are part of this evolution and can benefit the opportunities it offers.

What does this all mean for European policy-makers?

Our task is to get the European framework right. Therefore we need a concrete, ambitious and cross-cutting strategy for Digital Single Market. The Commission outlined yesterday in its discussions the future strategy on DSM. I think we can agree on the issues to tackle. Our policies, in all sectors, should be compatible with the digital environment. This means regulation, smart regulation and de-regulation, but also other means, such as innovation and financing.

The starting point of new regulation should be creating ideal conditions for making the most of new technology and new business concepts. Harmonization should support this goal. However, the means for completing the digital single market don’t always need to be regulatory ones. On the contrary, I believe there is a greater risk for over-regulation than lack of regulation. Regulation is by its very nature lagging behind the development – and this applies especially for slow processes of European law-making.

We should be confident enough to give the markets sufficient degree of freedom to find the best ways to correct problems if they arise. If problems cannot be corrected and regulation is required, technology neutrality and Open Source should be the starting point: it is not the legislators’ task to pick up the winning technologies or excluding innovative products a priori. In keeping with this, I would also like to endorse that the digital test would be part of the competitiveness proofing exercise in cases where European legislation is deemed unavoidable.

Moreover, Europe should not be closing doors from our global competitors, protectionist measures only hamper businesses. We should rather commit ourselves to making Europe an ideal location for companies to innovate and experiment, to invest and reach for global success. I would like to see the new Fund for Strategic Investment to reflect this goal. At the same time we should be requesting reciprocity: opening doors means also requesting a level playing field for European industries outside Europe.

“Think digital first” should be the way we cheer, but whatever the slogan, the principle is the most relevant thing to keep in mind whenever EU considers new regulation or other political large-scale measures. If Europe wants to become the leading digital economy, we need unified approach by the member states, even though that it inevitably requires compromises and maybe changes in long standing policies. Thank you.