Europe has both a competitiveness and a fantasy-thinking problem

As European member states’ representatives debate the proposed Digital Omnibus, the Europeans are divided.

Traditionally, some are ringing alarm bells, seeing the Digital Omnibus as a threat to Europeans’ privacy and digital rights, and questioning the legality of the Omnibus altogether.

On the other hand, behind closed doors, even some policymakers agree that perhaps the Commission’s Digital Omnibus proposal (aimed to help European businesses) should have been even more ambitious, given the European tradition of heavily watering down ambitious proposals.

In the EU, we have a diverse pool of opinions that helps balance political decisions and how they affect the lives of Europeans. It does, however, seem that European businesses have been too inactive and not vocal enough over the years, which now leaves them facing an inadequate backlash when a modest shift from the status quo is proposed in the Omnibus(es).

Unfortunately, many Europeans nowadays are stuck in a fantasy-thinking dimension: they want European businesses to become bigger, stronger, and therefore globally competitive, but without changing the rules that European companies themselves call the biggest obstacle to their work.

Main pain points for European tech: not a US problem, a European one

Intellectually dishonest critics of the Digital Omnibus often resort to calling it a result of US pressure and lobbying. However, a true champion of European competitiveness, Mario Draghi, has repeatedly called for the same reforms that the European Commission is now working on.

The most pressing issues for European businesses remain the same: in addition to the lack of access to capital, fragmented rules across the EU, a heavy regulatory burden, high compliance costs, and regulatory uncertainty all lead European companies to focus on compliance instead of scaling and, later, competing at a global level.

As Draghi mentioned in his speech in September, simplifying the General Data Protection Regulation (GDPR) remains “one of the clearest demands” among European companies. Moreover, the GDPR has “raised the cost of data by about 20% for EU firms, compared with US peers.”

A second remark concerns the AI Act. Draghi explicitly called it “another source of uncertainty” and urged postponing implementation of the AI Act for high-risk AI systems until we better understand the drawbacks.”

No silver bullets: the Digital Omnibus is only a first step

While the Digital Omnibus is a step in the right direction, as are the EU’s Data Union Strategy and the incoming Digital Fitness Check, both European companies and policymakers must not waste time. They should make the most of these interventions, while also planning and scheduling for plans B and C.

Much like with everything else, fundamental change in Europe occurs through numerous initiatives and interventions – and much more will need to happen for European businesses to gain real opportunities to become more competitive.

This week, AI Chamber and a group of organisations (including our parent organisation, the Consumer Choice Center Europe) representing Czechia, Poland, Slovakia, Hungary, Lithuania, Denmark, Bulgaria, and others sent a letter to the Council of the European Union and Members of the European Parliament, urging them to seize the opportunity presented by the Digital Omnibus and to focus on further changes needed for European companies to become more competitive.

The letter expresses strong support for the European Commission’s efforts with the Digital Omnibus, but stresses that the scope might be insufficient. The signatories suggest that the Digital Omnibus proposal should be treated as a first step, not a final goal, in helping European businesses become more digitally competitive.

The letter calls for the simplification of the AI Act, the postponement of its implementation for two years, and ensuring that rules on using legitimate interest for AI development are clear, coherent, and fully harmonised across the EU.

Finally, the letter takes a modest jab at those who advocate for European strategic autonomy but want to have their cake and eat it too, without making any significant changes that might be useful for European businesses’ growth:

“We cannot hope to achieve genuine "strategic autonomy" if we are incapable of developing our own foundational technologies,” it reads.

This article was first published on EU Tech Loop and has been shared on Euronews as part of an agreement with EU Tech Loop.