At a time when Europe’s economy experienced zero growth in the final quarter of 2023, the region faces a crucial decision that could shape its long-term future. To lift its stagnating economy, Europe needs to focus on technology-enabled economic growth, as its competitors have done. Europe’s slow technology adoption rates, combined with new regulations, have stalled foreign investment and pose a major threat to the region’s future prosperity. Without closing its technology gap, European firms will likely be at a competitive disadvantage, jeopardizing Europe’s long-term economic success.
A European Central Bank board member has warned of the urgent need to address Europe’s technology gaps to overcome its competitive crisis. Slow technological adoption and strict regulations are among the root causes of Europe’s lack of competitiveness. However, the region could potentially generate €3.2 trillion in additional economic gains by fostering a more innovation-friendly environment and closing its growing technology gap. This would have a significant impact on nearly every sector of the European economy and provide the boost that Europe urgently needs.
One of the main barriers to closing the technology gap is a lack of trust in technology. Consumers and businesses are hesitant to adopt new technologies if they fear risks to their privacy, safety, or security. European cybersecurity agency has stressed the importance of incorporating security and privacy safeguards into technology design to build trust. Companies leading on these issues can increase annual growth by 10% or more. However, the new Digital Markets Act (DMA) in the EU may pose challenges by requiring companies to remove existing privacy and security safeguards in the name of fostering competition.
The DMA’s rules contain flaws that could expose users to new risks, overriding central safeguards designed to protect privacy and security. This could impact various groups like business users, parents, seniors, intellectual property owners, and voters. While technical experts and the U.S. government have raised concerns about the DMA, the EU has not done much to address potential risks for businesses and consumers. Legislators have created conflicting mandates and ambiguous provisions, leaving policymakers with crucial questions to address.
In aiming to regulate US companies, the DMA and its companion Digital Services Act could increase costs on European businesses significantly. Europe must embrace a more trusted technological future to drive economic growth and enhance its long-term competitiveness. By maximizing trust in the mobile ecosystem, overcoming lagging 5G adoption rates, and leveraging mobile innovation, Europe could achieve substantial economic gains. This pivotal moment will determine whether Europe can transition from a technological laggard to a leader and unlock the opportunities that a more innovative economy can offer, improving people’s lives in the process.
