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Regional Sovereignty over Data as a Claim for Global Leadership?

On February 19, 2020, the European Commission unveiled its Strategy for Europe’s digital future. According to the document, the EU plans to become one of the global leaders in data management. According to experts, the creation of a single European data market is designed to increase the EU’s global competitiveness and reduce the EU countries’ dependence on transnational corporations, primarily those from the United States.

From an economic point of view, in the 21st century, the importance of the control and management of digital data is undeniable. Data is the basis of economic development in the context of the Fourth Industrial Revolution (4IR), being a necessary resource for the development of technologies such as artificial intelligence and machine learning. However, despite the fact that the very notion of 4IR was proposed in Europe (it was conceptualised by Klaus Schwab from Switzerland, and it was realised for the first time in Germany) and the EU has advanced positions in a number of high-tech industries in the global data market and in the field of artificial intelligence, the EU’s position now is rather weak. According to the UNCTAD estimates, in 2019 companies from the USA and China accounted for 90% of the market capitalisation of modern digital platforms, and the share of European companies was only 4%. The United States and China are also leaders in the development of artificial intelligence, which is associated with the large amounts of personal data to which companies from these countries have access. If Chinese companies are focused on domestic markets (the population of China in 2018 was 1.3 billion people), the American companies collect and process data on a global scale – for example, the number of Facebook users in 2018 was 1.5 billion people. At the same time, in 2018, the population of the EU countries amounted 512 million people, which limits the ability of European companies to challenge their American and Chinese competitors, both in the field of data control and in the development of AI technology.

The current situation is forcing the EU countries to seek alternative approaches to gain leadership in the new digital reality. One such approach may be regulatory leadership – leadership in the development of transnational standards for working with data, including the protection of personal data, which other countries will focus on or have to copy. The modern digital economy is in dire need of such standards, but neither the United States nor China is ready to offer them for fear of undermining the economic potential of their respective high-tech giants. The EU digital strategy, as a claim for digital regulatory leadership, is able to not only increase the attractiveness of European markets for foreign investors and expand the economic advantages of European high-tech companies in global markets, but also strengthen the soft power of the EU. 

Another significant aspect of the new strategy is the digital sovereignty issue. The concept of digital sovereignty that is popular today, is being discussed not only in Iran (in the context of restricting the influence of American digital companies), but also in the United States (in relation to the Huawei, a major Chinese tech company). It is the issue of control over cross-border data flows as a strategically significant area. The issue of digital sovereignty is especially relevant due to the fact that according to the popular view in the academic and expert community, the political leadership in the international arena will be largely based on technological superiority in the field of the artificial intelligence development. The “data is new oil” metaphor is becoming increasingly popular today. It means that each state is interested in controlling its own “data deposits” as a politically significant and economically challenged resource. Thus, the adoption of the EU digital strategy solves one additional goal – it ensures the sovereignty of the EU and limits the possibilities of influence in the digital environment from the United States, which in recent years has become less and less committed to NATO obligations.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.