How to promote a European Digital Single Market based on data

Data has become the main value of companies. An increasing number of economic sectors are incorporating the capture and analysis of data not only as a fundamental metric to know how their business has evolved, but also to predict how they will behave in the future.

The analysis of large volumes of data is an essential resource for economic growth, job creation and social progress. There are hundreds of examples: industry companies that analyse the performance of their  machinery to predict when maintenance tasks will be necessary; utilities that base their production adjustments based on energy consumption patterns that allow to predict users demands; or farmers who schedule irrigation according to weather and crops behavior.

For this ecosystem to work properly, companies not only need internal data, but also need to have access to external information: open data from public or private sources that enrich the analysis models or work as a basis for the creation of new products and services. In other words, it is necessary to create a Single Digital Market, where certain data are shared between the member states.

The European Union is aware of this situation and, therefore, they started a conversation with states and other stakeholders. The objective is to develop the most appropriate actions to take advantage of the full potential of European data economy. According to the EU, the value of the EU data economy was €272 billion in 2015, close to 1.9% of GDP, but this value could more than double by 2020, with adapted policy and legal solutions.

One of the first actions that EU is carrying out is to analyze the possible challenges and propose solutions, as detailed below:

Free flow of data

Legal or administrative restrictions on data location may prevent the private and public sectors from having access to data. It is difficult for a small service provider to offer competitive prices in several markets within the EU, because it would have to arrange data storage or processing capacity in every member state.

The solution is removing data localisation restrictions except if they are required for national security. Data does not have to be stored in one specific member state, because free flow of data is guaranteed based on the General Data Protection Regulation (GDPR).

Data access and transfer

As we have anticipated before, companies tend to analyse data only in-house. The exchange of data with other stakeholders remains uncommon, because there are no comprehensive policy frameworks for the economic use of non-personal and anonymized data generated by machines and sensors.

Therefore, it is necessary to facilitate and encourage the exchange and reuse of data, protecting investments and assets. For example, encouraging the use of common suppliers that help to optimize costs and improve efficiency: while agricultural machines need 90 minutes to map yields from one hectare, a specialized provider can do the same in 10 minutes, using drones and unified data from different farms.

Legal responsibility for data based products

An Internet of Things ecosystem is made up of many market players (software providers, hardware providers, management platforms, security providers, etc.). This generates a complex context where it is difficult to identify who is responsible for each task, which affects innovation and uptake of data driven products and services.

To solve it, it is necessary to define the responsibilities previously.

Data portability, interoperability and standards

Personal data portability is a right and, therefore, it cannot be complex or expensive. However, a business using cloud services cannot easily extract or port their data because it might be too expensive or technically complicated (for example, to switch providers).

Therefore, it would be necessary to reduce switching costs in order to stimulate an innovation-friendly environment and improve technical interoperability and data standards.

The creation of a digital single market is one of EU priorities. Overcoming these challenges requires a common effort from member countries and companies to create clear rules that allow the sharing of interesting data in a simple manner and without great costs. In this way, it will be possible to improve innovation and boost the European economy.