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Laura Petrone

Senior researcher, GlobalData Thematic research

Will the EU secure the funding it needs to make its industrial data plans a reality?

The European Commission’s new digital plan proposes the creation of so-called data spaces, where industrial data can be shared across sectors. While this would be an important step towards a single market for good quality, interoperable data, it remains to be seen whether the EU member states will be able to reach a consensus on the plan and unlock the required funding.

The Commission sees the limited access to data held by both public and private actors as one of the main obstacles to the development of AI technologies in Europe. As such, the idea of data spaces is an important step towards strengthening the EU’s position in AI. The more data that is shared, especially among businesses, the more sophisticated algorithms can become.

The creation of data spaces also aims to address an important anti-trust issue. In the digital era, control of data has become the biggest regulatory concern. The Commission considers “the high market power of certain platforms” as detrimental to a fair and open market. By making it compulsory for big tech companies to share data with smaller players, the EC wants to ensure increased competition in the market. It is also aiming to establish portability rights, i.e., the ability for both individuals and companies to move their data between platforms.

Following the example of open banking, companies would be required to hand over data to competitors, without the user losing what they have built on a platform. In this scenario, users would be able to manage, through a single service, the data they hold and share. Margrethe Vestager, the commission’s digital and competition chief, recently commented that forcing tech companies to open up their data may be a possible antitrust “remedy” that “will actually work”.

For now, Brussels is working on a legislative framework to support this plan and all the details will be clarified over the next few months. Expect long negotiations before an agreement is reached at the European Council level. Whether the EU will be able to unlock the required level of funding, which is estimated at between €4bn and €6bn and is set to be split between the Commission and member states, will partly depend on the negotiations about the 2021-2027 budget, which looks particularly tight after Brexit. Only 3 per cent of the overall budget goes to the technology sector and this is not likely to change anytime soon, despite lobbying from the tech industry, given that the final budget relies on unanimous agreement from all 27 EU countries. Instead, the EU is seeking to spend more in other spheres, such as climate change and border security.

Some of the money might come from taxing tech giants, with the Commission considering establishing an appropriate framework for digital taxation. But while a number of member states have backed plans to tax tech companies revenues, reaching a consensus on the issue at the EU level appears daunting at this stage.

Laura Petrone is a senior analyst at GlobalData Thematic research. NS Tech and GlobalData are part of the same group.