Opinion

The four pillars of a digital strategy

The European Commission’s digital compass attempts to build strong fundamentals. It is a start. An ambitious digital agenda however requires a strategy that is all encompassing and coherent.

By: Date: March 16, 2021 Topic: Innovation & Competition Policy

This opinion piece was originally published in the Money Review section of Kathimerini and in El Economista.

On 9 March, the European Commission published a Digital Compass to help advance EU ambitions for a digital transformation by 2030.

The proposals rest on four points: 1) ensure more citizens and professionals have basic digital skills, 2) provide sustainable digital infrastructure, 3) promote the digital transformation of private businesses and public services and 4) encourage a system of cooperation between Member States to monitor and promote these goals.

How does this fit into an overarching digital strategy? The process of digitalisation has brought enormous benefits to our societies, whether through connectivity, convenience, or wide and quick access to services. But it has also posed challenges for the choices we have as individuals: what to share and what to keep private, what is data and what is information, what should be monetised and what really should not. Digitalisation is unavoidable and irreversible. But our societies are struggling to understand the consequences of the depth of change it brings, regulate it and direct it.

Any attempt to understand the limits and harness the benefits of the digital era in a coherent strategy should be built on four pillars: ethics, social fabric, the economy and security.

I start with ethics because the digital era confronts us with the essence of human choice, whether we are free to choose and remain accountable for these choices. How do you program a self-driving car to choose between who is going to die in a car accident? This is the question asked in MIT’s moral machine experiment where participants are asked who they would save between a young athletic woman and a homeless man, or between a baby and a business executive.

Would you accept an artificial intelligence algorithm determining your credit worthiness, or whether you are guilty of a crime, or if the dark spot on your chest is cancer? Who designs this algorithm and are they held to account for its actions? What is the future of humanity when it is absolved of responsibility?

Increased connectivity is also changing the fabric of our societies. Every citizen now has a digital footprint, a record of their online activity: from entertainment, to shopping, our public administration and taxes, and perhaps even voting in the future. What choice do we have to preserve privacy and anonymity, and are we properly informed?

At the same time, connectivity and ease of access in the digital world reinforces biases as we choose to interact with those similar to us. This provides us only with information that we are keen to hear and makes us vulnerable to targeted misinformation. Our inability to distinguish what is real and what is fake news poses a threat to our democracies.

Then there are the economic implications of digitalisation. The digital economy needs far less capital to develop and can therefore scale up faster in comparison to traditional industries. This has given rise to winner-takes- all global firms that are difficult to monitor and regulate.

The digital era is also making multi-sided markets the norm, rather than the exception, where the “currency” for transactions is not money but data. Data that can be turned into information, encouraging some to argue that it is the new oil, or that it should be an additional input in the classical production function. The abundance of data and the search for ways to monetise it is a defining characteristic of the digital economy that offers opportunities for growth but challenges to privacy and choice.

Last, the digital era changes the orientation of security and defence. Most of our daily activities rely on online services: from the running of hospitals, to electricity grids, financial services, to the storing private information. Malicious cyber and hybrid disruptions (like cutting the deep-sea cables or smear campaigns on social media) can jeopardise the functioning of entire countries. It is difficult to imagine being ambitious about our digital presence, if we do not at the same ensure that this presence is safe.

These four pillars need to be built on solid fundamentals, that provide the basis for digitalisation: good infrastructure, (cloud storage, 5G, physical cables), up-to-date digital skills, conditions for innovation and European cooperation to bring it all together.

A credible strategy requires erecting these pillars but also understanding the connections between them. How the ethical choices we make will impact the economy, or how the effects of economic regulation will alter the social fabric. How can we have a single supervisor for our banks through EU banking union, but rely on national security to protect them from cyber-attacks? Security will be decisive in enabling or preventing the development of the digital economy.

The European Commission’s digital compass attempts to build strong fundamentals. It is a start.  An ambitious digital agenda however requires a strategy that is all encompassing and coherent.


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint.

Due to copyright agreements we ask that you kindly email request to republish opinions that have appeared in print to [email protected].

Read about event More on this topic
 

Upcoming Event

Jul
8
12:00

Investment firepower for the recovery: a conversation with Philippe Donnet, CEO of Assicurazioni Generali

At this event the CEO of Assicurazioni Generali, Philippe Donnet will be in conversation with Guntram Wolff, Director of Bruegel.

Speakers: Philippe Donnet and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article Download PDF More on this topic
 

Working Paper

Platform mergers and antitrust

This paper sets out a framework for addressing competition concerns arising from acquisitions in big platform ecosystems. This is a June 2021 update of the same paper published in January 2021.

By: Geoffrey Parker, Georgios Petropoulos and Marshall Van Alstyne Topic: Innovation & Competition Policy Date: June 15, 2021
Read about event More on this topic
 

Past Event

Past Event

The Recovery and Resilience Fund: Accelerating the digitalisation of the EU?

How can new EU funds financed by EU borrowing supplement national digital and green funding and EU funds available from the standard seven-year EU budget to accelerate digitalisation?

Speakers: Sam Blackie, Zsolt Darvas, Maria Teresa Fabregas Fernandez, J. Scott Marcus and Ben Wreschner Topic: European Macroeconomics & Governance Date: June 8, 2021
Read article More on this topic More by this author
 

Blog Post

Algorithmic management is the past, not the future of work

Algorithmic management is the twenty-first century’s scientific management. Job quality measures should be included explicitly in health and safety risk assessments for workplace artificial-intelligence systems.

By: Laura Nurski Topic: Innovation & Competition Policy Date: May 6, 2021
Read article More on this topic More by this author
 

Podcast

Podcast

Money, money, money!

The nature of money is under scrutiny as central banks begin pondering issuing digital currencies

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: April 30, 2021
Read article More by this author
 

Opinion

Central bank currencies going digital

Electronic cash might be the future, but it is still unclear what payment innovation it offers for the public, certainly in the euro area. And it is unlikely to fully replace the comfort the consumer feels in having money under the mattress.

By: Maria Demertzis Topic: Finance & Financial Regulation, Global Economics & Governance Date: April 27, 2021
Read article More on this topic More by this author
 

Podcast

Podcast

A digital yuan?

China is moving towards a digital currency but there is a long way to go.

By: The Sound of Economics Topic: Global Economics & Governance Date: April 14, 2021
Read about event More on this topic
 

Past Event

Past Event

Declining competition: a transatlantic challenge

Join us for a discussion of transatlantic competition with Kristalina Georgieva, Margrethe Vestager and Amy Klobuchar among others.

Speakers: Romain Duval, Kristalina Georgieva, Greg Ip, Amy Klobuchar, Nancy Rose, Tommaso Valletti, Margrethe Vestager, David Wessel and Guntram B. Wolff Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 15, 2021
Read about event More on this topic
 

Past Event

Past Event

Protecting workers in the platform economy

How can we protect platform workers while preserving the opportunities and benefits that are generated by the sharing economy?

Speakers: Payal Dalal, Mario Mariniello, Diane Mulcahy, Ana Carla Pereira, Jacob Rudbäck and Shamina Singh Topic: Innovation & Competition Policy Date: February 24, 2021
Read article More on this topic
 

Blog Post

Regulating big tech: the Digital Markets Act

The European Union’s proposed Digital Markets Act will attempt to control online gatekeepers by subjecting them to a wider range of upfront constraints.

By: Julia Anderson and Mario Mariniello Topic: Innovation & Competition Policy Date: February 16, 2021
Read about event
 

Past Event

Past Event

Disruption or transformation: the impact of a digital euro on the financial system

How would a digital Euro impact the financial system?

Speakers: Fabio Panetta and Guntram B. Wolff Topic: European Macroeconomics & Governance, Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 10, 2021
Read article Download PDF More on this topic
 

Working Paper

Platform mergers and antitrust

This paper sets out a framework for addressing competition concerns arising from acquisitions in big platform ecosystems.

By: Geoffrey Parker, Georgios Petropoulos and Marshall Van Alstyne Topic: Innovation & Competition Policy Date: January 26, 2021
Load more posts