German industry’s digital policy priorities for the new EU Commission
#PowerUpEurope: Competitiveness through digitalisation
6. August 2024
In the last legislative term, the von der Leyen Commission has developed an extensive set of legislative acts to govern the digital sector, including the Artificial Intelligence Act (AI Act), the Data Act, the Chips Act, the amended cybersecurity directive NIS2, the Cyber Resilience Act, the Digital Services Act (DSA), the Data Governance Act, the Gigabit Infrastructure Act, the 5G Toolbox and the Digital Markets Act (DMA). This regulatory framework has far-reaching implications for business processes and the development of new digital business models. Many of the legislative acts listed above have only been adopted recently or are still in the comitology process In order to make this ambitious regulatory framework a European success story, a lean, EU-wide uniform implementation – that learns from past mistakes – is needed.
German industry supports Ursula von der Leyen’s ambition to enhance Europe’s competitiveness. German industry is convinced that to boost prosperity and competitiveness while reducing greenhouse gas emissions, the potential of digital technologies must be leveraged. To this end, we strongly believe that the next European Commissioners responsible for digital must:
▪ prioritise implementation of Europe’s digital legislation
▪ enable companies to exploit the untapped potential of the data economy
▪ favour the development and utilisation of Artificial Intelligence
▪ ensure Europe has a resilient, high-performing and sustainable digital infrastructure
▪ contribute to an EU-wide harmonized implementation of cybersecurity regulations
▪ invest in key technologies, such as microelectronics, AI and quantum computing
▪ address and structurally tackle the increasing need for a diverse IT workforce
We urge the new European Commissioners responsible for all digital dossiers to always check whether new initiatives contribute to strengthening Europe’s competitiveness while promoting the uptake of digital solutions and infrastructures. To remain on par with global competitors, such as the USA and China, the EU must step up its investments in key and future digital technologies. Therefore, we strongly encourage the Member States and the European Commission to dedicate more money in the upcoming multi-annual budget to digital technologies and infrastructures. Moreover, we would appreciate if the European Commission was to integrate funding programmes and digital policy regulation more closely than in the past.
Implementation first
From data to AI, cybersecurity and digital platforms, the first von der Leyen Commission has introduced a plethora of digital regulatory acts Since the AI Act, the Cyber Resilience Act, the NIS 2 Directive and the Data Act are only in the process of taking effect, their concrete implications for businesses and consumers are still unclear. Nonetheless, considering the sheer volume of new regulatory requirements and especially new reporting obligations introduced by the various acts, enterprises are certainly facing considerable additional paperwork. To ensure compliance, businesses have to appoint specialised staff, which represents an additional challenge in view of the shortage of skilled workers.
Policy recommendations
▪ Limit further digital policy regulation to the absolute minimum. Rather than immediately trying to regulate new technologies, the EU urgently needs to strengthen the technological openness of society, invest in competencies and the training of skilled workers, and provide targeted support for the development of new, innovative technologies, e.g. through additional funding and sand boxes. The European Commission should now give the numerous digital policy measures it has adopted time to take effect and develop – in close collaboration with industry – unbureaucratic implementation concepts tailored to industrial practice within the framework of implementing acts. Despite our general hesitance regarding the introduction of new regulatory initiatives covering digital topics, we welcome the EU Commission’s White Paper “How to master Europe’s digital infrastructure?” in principle and would welcome a respective Digital Networks Act.
▪ Reducing complexity: Government responsibility also lies in keeping regulatory complexity at a level that is manageable for both its addressees as well as the responsible supervisory authority. Since many of the recently adopted initiatives, such as the AI Act, the EU Data Act and the NIS-2 Directive, have not been implemented at the national level yet, the European Commission together with Member States should focus on the implementation of recently adopted regulatory acts by establishing the necessary administrative structures.
▪ Minimise the increase in overhead costs for public administration: Recent regulatory digital initiatives have led to a gigantic increase in overhead costs with far reaching implications for public budgets. We urge the European Commission to aim for regulations that do not create such an exuberant number of new jobs in public administration. Money spent for public administration constraints public budgets and thereby leaves less room for investments in Europe’s competitiveness.
Exploiting the untapped potential of the data economy
It is imperative to foster an environment conducive to innovation and digital transformation. The EU's digital legislation must be implemented effectively to reduce legal uncertainties and unlock the full potential of digital technologies, thereby boosting prosperity and reducing greenhouse gas emissions. Policy should focus on creating a unified digital market, enabling companies to harness the power of data, and promoting the development of Data Business models. This will ensure a resilient, high-performing, and sustainable digital infrastructure, driving Europe's economic growth and technological leadership
Policy recommendations
▪ Harmonise and streamline enforcement: Ensure a harmonized and streamlined enforcement structure for the EU-AI Act and EU-Data Act to bolster innovation and competitiveness within European industry.
▪ Enable better data usage in Europe: The EU should advance the development of EU data spaces, such as Catena-X, Manufacturing-x and sphin-x
▪ Explain the necessity of a European Data Union Strategy: German industry questions Ursula von der Leyen’s idea to publish a European Data Union Strategy. At both European and national level, governments and the European Commission have issued a plethora of digital policy strategies, which often have not been followed by concrete actions. Moreover, with the EU Data Act and the EU Data Governance Act recently passed, and several data space initiatives currently in the making, we currently do not see the added value a respective strategy would have. Therefore, we would appreciate if the European Commission was to initiate a thorough stakeholder consultation to analyse a potential demand for a respective strategy.
▪ Create legal certainty for the use of data: The consulting services provided by the European data protection authorities to companies should be improved and more assistance offered for practical implementation. Efforts should be made to ensure that the GDPR is interpreted as uniformly as possible across Europe.
AI – National implementation, international standardisation and EU-wide diffusion of use-cases
Artificial Intelligence plays a central role if it comes to bolstering Europe's competitiveness. Stringent and courageous policies are needed to make up for the shortcomings of recent years, which have left the EU as a region far behind in terms of the development of AI models. Companies must find a positive investment climate, practicable regulation and a strong labour market in order to scale their business ideas for the future. Promoting research and innovation, creating a unified digital market, and ensuring fair competition are key elements to secure and enhance Europe's position in the global economy.
Policy recommendations
▪ Ensure access to high-quality computing infrastructure: Access to high-quality computing infrastructure is crucial for the development and application of generative AI. Therefore, we welcome Ursula von der Leyen’s announcement to set up an AI Factories initiative Industrial access to HPC should be simple and unbureaucratic for companies of all sizes.
▪ Ensure harmonised implementation of the EU AI Act: The AI Act must be implemented quickly and uniformly in order to avoid fragmentation and innovation-damaging effects. Institutionalised industry participation is essential when the Commission and AI Office are shaping the downstream legal acts.
▪ Streamline initiatives aiming at the usage of AI: Europe is still far behind its set targets regarding the use of artificial intelligence – while the European Commission is aiming to bring the proportion of companies using artificial intelligence to three out of four by 2030, it is currently at eight percent across Europe (large companies: 29%; SMEs: 7%). The shortage of skilled workers and concrete use cases as well as inadequate data management, data quality and legal uncertainties in the use of data represent the main obstacles to increased digitalisation While German industry welcomes the Commission's efforts to apply AI, such programmes must be developed with clear and concrete strategic objectives. There are already a large number of initiatives for the expansion of industrial AI applications. In practice, there are often fundamental hurdles. We, therefore, advocate a precise elaboration of the Apply AI Strategy with a holistic basic focus.
▪ Ensure industry participation in the European AI Research Council: German industry welcomes the proposal for a European AI Research Council as long as there are opportunities for industrial participation in R&D activities.
Resilient. High-Performing. Sustainable. Towards Europe's future-proof digital infrastructure.
German industry would appreciate if the European Commission was to place a political focus on digital infrastructure in the next legislative period. We assume that digital infrastructures are not mentioned in the Political Guidelines due to the recently completed consultation on the European Commission’s White Paper “How to master Europe’s digital infrastructure needs?” Digital infrastructure and the connectivity they provideare crucial to making Europe fit for the future and to ensure its future competitiveness. Sufficient bandwidth, low latency and resilience of digital networks are key to enabling industry to leverage the potential of important future technologies, such as Internet of Things (IoT) devices, autonomous vehicles, AI as well as the Industrial Metaverse
However, Europe’s digital networks of today are not yet ready to reap these benefits. The European market is fragmented, has a high number of independent providers and lacks the financial strength to fund the substantial investments needed to tackle the technological challenges it faces. In 2022 the mobile average revenue per user (ARPU) of electronic communications operators in the EU stood at only 15 EUR, as opposed to 42.5 EUR in the US and 26.5 EUR in South Korea. In view of the intensifying global competition, there is an urgent need for greater promotion of key technologies. Recognizing the importance of digital networks for the competitiveness of European industry, the Digital Network Act (DNA) should therefore be the central digital policy initiative of the next European Commission. The BDI recognizes that the potential of digital infrastructures must be leveraged through regulatory initiatives, support measures and strategic policy and security decisions. However, some of the proposals in the White Paper need to be revised before being included in a future DNA.
Policy recommendations
▪ Expand European funding measures for digital infrastructure: German industry is in favour of creating pilot infrastructures to test new technologies and promote exchange between different players along the value chain. In addition, we welcome the proposal to create a new, infrastructure-focused Important Project of Common European Interests (IPCEI) and to simplify European funding measures to promote the efficient use of resources as well as a reduction of bureaucracy.
▪ No mandatory switch-off date for copper networks: German industry strongly opposes a mandatory copper switch-off by 2030, as it is overly ambitious and completely neglects diverging network characteristics across EU Member States. It would lead to excessive costs, a complete standstill in the expansion of digital infrastructure in some Member States and the shutdown of functioning, high-quality networks at the expense of customers.
▪ Strengthen coordination of spectrum allocation at Union level: German industry generally supports a better coordinated allocation of spectrum in Europe. However, it is important to find a balance between a more centralised approach and fully independent decisions in Member States. Additionally, the requirements of both telecommunication operators and user industries must be considered
▪ Facilitate investments in green digital infrastructure: German industry strongly supports the Commission’s intention of steering green investment into electronic communications networks, and in particular, the proposal to include electronic communication networks in the EU Taxonomy. This not only promotes the sustainability of the telecommunications sector through
more efficient networks, but also enables the use of green technologies in other sectors, and is therefore, crucial for the ecological transformation. However, inconsistencies with other pillars of the sustainable finance regulatory landscape currently make its usage difficult Therefore, the inclusion of electronic communication networks into the EU Taxonomy must be accompanied by a parallel workstream, aiming at improving sector-overarching usability of the EU Taxonomy and reducing reporting requirements.
▪ Strengthening European resilience by expanding submarine cable infrastructure: German industry welcomes the creation of cable projects of European interest (CPEIs), since connectivity and a resilient submarine cable infrastructure are of key importance to the economy. As the backbone of global data traffic, they are exposed to sabotage attempts, as shown by suspected attacks on submarine cables by the Houthi militia in the Red Sea. BDI therefore expressly supports the recognition of submarine cables as strategically relevant security infrastructure, and welcomes the respective measures, such as a common EU governance for submarine cable infrastructure.
For more detailed information on our policy recommendations please refer to BDI’s policy paper on the White Paper: https://english.bdi.eu/media/publications#/publication/news/resilient-high-performingsustainable-towards-europes-future-proof-digital-infrastructure
Cybersecurity – It’s time for implementation
In 2023, cyber incidents caused a damage of almost EUR 150 billion to German industry alone. Therefore, improving Europe’s cyber-resilience is paramount if Europe wants to reap the full potential of the digital transformation and remain on par with its international competitors. Therefore, the introduction of horizontal cybersecurity requirements for all products with digital elements in the Cyber Resilience Act is a major step towards strengthening Europe’s cyber resilience and supports companies in the implementation of the requirements emanating from the NIS 2 Directive. Also, German industry supports the inclusion of new sectors in the NIS 2 Directive as well as a broad set of risk mitigating measures that these entities have to fulfil. While the newly adopted legislative framework provides an adequate foundation for a more cyber-resilient Europe, only through harmonised implementation across the EU by private and public entities these measures will enhance Europe’s cybersecurity level.
Policy recommendations
▪ Reduce reporting obligations: The excessive reporting requirements set out in the NIS 2 Directive will unnecessarily tie up the few available cybersecurity staff without really strengthening the cyber resilience of companies. The new European Commission should stick to von der Leyen’s promise to cut red tape and should reduce the currently foreseen number of reports per significant incident to no more than two.
▪ Harmonise implementation: Companies operating in more than one EU Member State are confronted with diverging implementations of the NIS 2 Directive. This causes unnecessary costs without increasing their cyber-resilience. Therefore, German industry encourages the European Commission to swiftly publish all implementing regulations under NIS 2 to reduce the regulatory hotch-potch at the outset.
▪ Favour implementation over action plans and new initiatives: Instead of issuing a European action plan on the cybersecurity of hospitals and healthcare providers in the first 100 days of the mandate, the European Commission together with Member States should focus on the implementation of the NIS 2 Directive, which already provides for clear requirements. Enhancing Europe’s cyber-resilience requires concrete actions by each entity rather than new action plans, strategies etc.
▪ Improve the transparency of the process to draft schemes under the EU Cybersecurity Act: The current process of drafting schemes under the EU Cybersecurity Act is characterised by in-transparency and a lack of stakeholder engagement. We urge the EU Commission and ENISA to enhance the transparency of and stakeholder inclusion in the process of drafting EU cybersecurity certification schemes by publishing – on a quarterly basis – the draft of each scheme; offering quarterly webtalks for stakeholders to comment on the current draft; and better involving the Stakeholder Cybersecurity Certification Group (SCCG)
Increasing investments in key technologies
The loss of key technologies poses a long-term risk to competitiveness and economic security in Europe. International dynamics in geopolitically tense times can quickly lead to one-sided dependencies and shortages in the supply of essential goods. Lessons must be learnt from the experience of supply chain disruptions during the coronavirus pandemic. Investments in key technologies, such as quantum computing, AI, the Industrial Metaverse, 6G and microelectronics, must be stepped up to foster Europe’s long-term competitiveness and its resilience against supply-chain disruptions.
Policy recommendations
▪ Investing in key digital technologies: German industry appreciates Ursula von der Leyen’s announcement that Europe will augment its investment in the next wave of frontier technologies, in particular supercomputing, semiconductors, the Internet of Things, genomics, quantum computing, space tech and beyond. We would also appreciate investments in biotechnology and digital infrastructure technologies, such as 6G and submarine cables as well as cloud computing. However, respective financial investments should not be deduced from other budgets, such as the European innovation budget, but must be additional money.
▪ Harmonised European answers to international export controls: German industry welcomes the commitment to a European response to international export controls imposed on digital technologies in order to carefully consider how to navigate trade tensions between world regions.
▪ Promoting a European semiconductor ecosystem: We support the plans to further promote semiconductors and call for the microelectronics ecosystem to be considered in its entirety along the value chain. The vital role of semiconductors for European industry must be recognised with dedicated support programmes to build resilience and innovation.
▪ Refrain from sidelining the efforts of the Chips Act in favour of other projects: The process of building strategic and technological sovereignty and meeting the 20% production target set by the EU must be tackled not just with the EU Chips Act but also by combating the shortage of skilled workers and by finally launching the projects under the Important Project of Common European Interest (IPCEI) Microelectronics II. The focus on certain node sizes should be reconsidered with regard to user requirements, e.g. in the automotive industry
▪ Ensure that the EU Semiconductor Board is fit for purpose: The EU Semiconductor Board must be capable of performing its duties as an advisory council and be available and accessible to companies seeking to get involved.
▪ Intertwine digital policy initiatives and research funding: In times of geopolitical uncertainty and upheaval, it is crucial to establish a strategically orientated and coordinated industrial and innovation policy to make Europe a strong location for innovation and business in the future. The aim must be to secure Europe's technological leadership to strengthen our global competitiveness and at the same time to tackle key challenges, such as climate change, demographic change, resource scarcity and urbanisation. European re-search and innovation policy is a decisive lever in this respect which should be more strategically intertwined with digital policy initiatives to maximise the benefits emanating from respective European initiatives – especially in times of constrained public budgets
Skills, Inclusion & Women Empowerment: Address and structurally tackle the increasing need for a skilled and diverse IT-workforce
Studies consistently show that diverse teams are more profitable, innovative, creative, and sustainable. Innovation thrives when voices from different backgrounds come together to innovate and create IT solutions that have never existed before. However, the current reality is starkly different: women make up only 18% of the German IT workforce and 32% of the EU-wide IT workforce. This disparity is catastrophic not only for equality and participation but also for Europe’s global economic competitiveness. We simply are not pulling our weight as a union. Addressing and structurally tackling the increasing need for highly skilled IT professionals and more diversity in IT is crucial to ensuring a competitive, innovative, and inclusive IT workforce within the EU.
Policy recommendations
▪ Close the Skills Gap through Upskilling: Address the high demand for skilled workers in the STEM sector (science, technology, engineering, and mathematics) by implementing comprehensive upskilling programmes. We recommend expanding the European Institute of Technology and Innovation (EIT) Deep Tech Talent Initiative with a specific focus on reaching, activating, and empowering minority communities to develop skills in technology fields.
▪ Enhance Public-Private Partnerships: Foster stronger collaborations between member state governments, educational institutions, and private sector companies to bridge the gap between education and industry needs. Jointly, members should develop programmes that align curricula with industry requirements, facilitate internships and job placements, and promote lifelong learning opportunities.
▪ Foster the exchange of best practices: Across the EU, numerous initiatives focus on encouraging women to enter the IT field, such as Women in Tech, DiversIT, #SheTransformsIT, and many more. While cooperation and the exchange of best practices occur at the local level, scaling these solutions and ideas requires increased visibility and structural support from the European Commission.
Imprint
Bundesverband der Deutschen Industrie e.V. (BDI) / Federation of German Industries
Breite Straße 29, 10178 Berlin www.bdi.eu
T: +49 30 2028-0
EU Transparency Register: 1771817758-48
German Lobbyregister: R000534
Editors
Steven Heckler
Deputy Head of Department Digitalisation and Innovation
T: +49 30 2028-1523
s.heckler@bdi.eu
Polina Khubbeeva
Senior Manager Digitalisation and Innovation
T: +49 30 2028-1586
p.khubbeeva@bdi.eu
Philipp Schweikle
Working Student, Digitalisation and Innovation
T: +49 30 2028-1632
p.schweikle@ifg.bdi.eu
Alexandrea Swanson
Managing Director #SheTransformsIT – BDI Initiative
T: +49 30 2028-1487
a.swanson@ifg.bdi.eu
Document number: D 1971