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Free Flow of Data Proposals Risk Stunting Europe’s Digital Growth
European Commission's FFDI Communication proposals risk driving data-driven innovation out of Europe.
Yesterday the European Commission has published its Free Flow of Data Initiative Communication, a key part of its Digital Single Market Strategy. However techUK is concerned that these proposals will not achieve the aims of the Commission’s Initiative or wider Digital Single Market Strategy.
The creation of a digital single market in which data is able to flow freely across Europe would be a huge boon to Europe’s digital economy. The European Commission’s so called ‘Free Flow of Data initiative’ is supposed to meet this ambition. But there is little confidence amongst Europe’s digital businesses that these proposals will be much help. Indeed many fear that they will actually make it harder to scale and grow a digital businesses across Europe.
For example, the Commission has rowed back from its commitment to take legislative action to end inappropriate, misplaced and unjustified data localisation restrictions that prevent businesses from deploying more cost effective data infrastructures across Europe. This is despite the Commission’s own Impact Assessment recognising that removing these restrictions would add €8 billion to the European economy every year. Instead the European Communication has announced a further consultation on data localisation.
It has also proposed new legal concepts and policy measures targeted at business to business transactions. These include new proposals on data ownership, access, reuse, and liability, and the creation of a new data producers right. Digital businesses have repeatedly argued that these issues are already being addressed through contracts between businesses.
While techUK welcomes further opportunities to provide input into the European Commission’s thoughts on the Free Flow of Data, the Commission has still repeatedly failed to present convincing evidence of a market problem or failure that actually needs to be fixed. This is despite frequent calls from industry for the Commission to provide such evidence.
Digital businesses fear these proposals will stunt Europe’s digital ambitions rather than help support data driven digital driven businesses, both large or small, to scale, grow and flourish in Europe. Concerns include:
- A requirement for open access to B2B data which could drive investment away from data collection and stifle innovative business models
- Changes to well established and understood B2B contracts which could make it harder, not easier, for data-driven companies to do business in Europe
- The creation of a new data producers right which could create confusion, for businesses and consumers alike, over who is ultimately responsible for managing and securing data
With these proposals still at the consultation stage there is still time to re-think and develop policies that would support innovation and benefit Europe’s digital economy. techUK encourage the Commission to do this and stands ready to assist.
Given the UK’s decision to leave the EU, the UK government will be faced with a difficult decision about whether to diverge from EU rules or remain harmonised with them. Europe is by far the biggest export market for the UK digital services and UK companies will need to be compliant with EU rules in order to export their services there. However, if UK rules did start to diverge from EU laws this could encourage more UK companies to look to other global markets for export. But that won’t happen easily overnight. If UK data rules diverge from the EU that will create additional compliance obligations for exporting digital companies that will push up their costs.
The UK will have to decide on the merits of remaining harmonized with EU rules or diverging on those rules. Neither option is without complication or cost for the UK’s data-driven services businesses that trade intensively with European markets and that currently drive a positive trade balance in digital services with the EU.
techUK wants to see a fully functioning Digital Single Market. Removing restrictions on the Free Flow of Data would help achieve this, however in its current form the Free Flow of Data Initiative will not help.
>>See also techUK's response to wider package announced today on the European Data Economy.
