Thank you for that kind introduction. It is a pleasure to be here today with you for my second UNconvention. The U.S. Mission to the European Union has worked with the European Young Innovators Forum for a number of years, and I am glad that we are again a partner of this important event.
Last year, I spoke to you shortly after President Juncker had nominated his college of Commissioners and sent “mission letters” to each of them. We were heartened then by the emphasis on jobs, growth, and investment, including planned initiatives for a Digital Single Market and easing access to markets and finance for small- and medium-sized enterprises and startups.
Fast forward almost one year, and the Commission has delivered its proposal on the DSM and issued a green paper on a Capital Markets Union, among other efforts. You can tell by the number of recent events in Brussels devoted to these issues – many of which I have participated in – that there is a renewed interest in supporting entrepreneurship in Europe, including efforts looking at how to attract and unleash venture capital and other forms of entrepreneurial finance to help innovative young firms like the ones you are creating to scale-up and grow.
These policy discussions take place amid encouraging news that Europe is producing more significant technology companies than ever before. According to a recent FT article, for instance, the EU has produced 13 “unicorns” – tech-speak for companies with a valuation of more than $1 billion – since April 2014. This list includes companies like Rocket Internet, BlaBlaCar, and Shazam, which joined the list alongside more mature firms like Skype and Spotify.
I want you to know that the U.S. government supports entrepreneurship and innovation in Europe – as well as the rest of the world – and it’s something I take a personal interest in. Before becoming U.S. Ambassador to the European Union, I was active in the private equity industry, most recently as a Managing Director at a pan-European private equity firm that provides growth capital to small- and medium-sized businesses in a wide variety of services sectors. I worked with many entrepreneurs like you, and I’m here to tell you that I admire your creativity and willingness to embrace change and take risks.
Because of my interest in this issue, I recently hosted an event in May at the U.S. Mission to look at how we can help ventures grow in Europe. We brought together senior EU officials and participants from both the United States and Europe involved in venture capital, angel investors, stock exchanges, and the venture arms from a number of major corporations. We discussed how the U.S. and EU can work together to increase access to capital for startups in Europe through venture capital and other innovative financial instruments and vehicles, the role of incubators and accelerators, and other ideas included in the European Commission’s green paper for a Capital Markets Union.
Afterwards, with Karen Wilson from Bruegel, we put out a paper of the 10 conclusions gleaned from our discussions. Not surprisingly, a number of them were focused on encouraging entrepreneurship through the right policies, the facilitation of entrepreneurial ecosystems, and by increasing awareness and interest in entrepreneurship in young people in Europe, including through the educational system. If you would like to read all of the conclusions from that event in more detail, I encourage you to visit the U.S. Mission to the EU’s website at useu.usmission.gov. We hope those conclusions can play a constructive role in policy development going forward. It is an area where I will remain invested throughout my time as Ambassador.
It is also an area of emphasis in our embassies in EU Member State capitals: At some of our embassies in Europe, we have sponsored “tech camps,” which bring together at-risk youth with mentors and non-governmental organizations to teach young people to increase their business and social networks, improve social media presence and seek new avenues for financing. In 2010, the U.S. government, together with the Spanish government, created “Solar Decathlon Europe,” which challenges university teams to design, build, and operate solar-powered houses that are cost-effective, energy-efficient, and attractive. At the most recent event in 2014, a team from Italy won the most recent event in 2014 held in Versailles, France.
I’m invested in this issue (and your future) because a growing, innovative Europe is in the interest of the United States. And you, not government bureaucrats, will be the ones to drive that innovation and change, and increase productivity and job creation in Europe. You and others like you are Europe’s vital force and future.
There is a role for government policy, however, and I want to spend a few minutes talking about the Digital Single Market, which has implications for you here today as well as for the United States. When you think about the history of the transatlantic relationship, you quickly realize that one of the driving forces of our respective economies has been innovation and the spread of ideas between the U.S. and Europe. And today, the transatlantic digital market is another opportunity to spur innovation on both sides of the ocean if we allow ideas and information to spread freely and efficiently.
Cross-border data flows between the U.S. and Europe, at about 15 terabits per second (that’s a 1 with 12 zeros after it), are the highest in the world – 50 percent higher than the data flows between the U.S. and Asia in absolute terms, and 400 percent higher on a per capita basis. And with the rapid growth in mobile computing and advent of the Internet of Things, big data analytics, and cloud computing, those flows are projected to grow substantially over the next decade, to the benefit of new digital companies, established industries, consumers, researchers, and governments on both sides of the Atlantic.
We should keep in mind that in addition to being each other’s largest trading partners for digitally deliverable services, the U.S. and the EU are also the two largest net exporters of these services to the world. In 2012, the United States’ $151 billion trade surplus in digitally deliverable services was surpassed only by the EU, which achieved a $168 billion digital services surplus. Let me repeat that point: the EU, not the U.S., is the world’s largest net exporter of digitally deliverable services.
And demonstrating the interconnectedness of both digital and traditional industries in the EU and the U.S., 53 percent of digitally deliverable services imported from the U.S. (including consulting, engineering, design, and financial services) were used in the production of EU exports, and 62 percent of digitally deliverable services imported from the EU were incorporated into U.S. exports.
The Juncker Commission clearly recognizes the importance and the tremendous potential of the digital economy. We understand the Commission’s Digital Single Market strategy is intended to create the regulatory and market conditions to help companies to innovate, collaborate, invest, create jobs, and drive growth while better serving consumers. This is a vision that we, of course, support. That kind of reform coupled with other important efforts, like the Transatlantic Trade and Investment Partnership (T-TIP), would create the proper conditions for a robust transatlantic digital economy in which EU and U.S. businesses will prosper and find new opportunities.
The proposal for the Digital Single Market is an important vision statement. We will closely follow the next steps the Commission takes to realize that vision. Greater investment in networks and digital skills, digitalization of traditional industries through greater technology uptake, harmonization of regulations, and reduction of barriers to doing business across the EU’s internal borders are all important objectives that would benefit consumers and companies, European and American alike.
We should be wary, however, of any proposals that could lead to a more closed and insular model for the digital economy, one that unnecessarily restricts data, stifles innovation through onerous or complex regulation, or tries to pick national champions and tilt the regulatory playing field against non-European companies. The creation of new barriers to the free flow of data both within and across Europe’s borders – whether intentional or inadvertent – could squander the potentially enormous benefits of Big Data analytics, the Internet of Things, digitalization of industry, cloud computing, and the preservation of an open, dynamic, and interoperable Internet.
Such an approach would treat Europe as a defensive and inward-looking consumer of technology, rather than a strong and outward-facing Digital Union that creates and harnesses new technologies, to increase both its digital and traditional exports to the rest of the world.
We also remain generally skeptical of calls for the special regulation of online platforms in the absence of evidence that such regulation would necessarily lead to better outcomes for consumers and a more dynamic and innovative marketplace, so we eagerly await the result of the Commission’s study of the role of platforms in the market. In the DSM communication, the Commission wrote, “Platforms have proven to be innovators in the digital economy helping smaller businesses to move online and reach new markets.”
We agree that, beyond delivering value to EU consumers, these platforms have built a strong ecosystem with European partners, suppliers and distributors; made major investments in Europe; promoted entrepreneurship and innovation; fostered research and digital skills training; and created jobs for Europeans.
To cite just one example, the launch of the iTunes App Store in 2008 created an industry from scratch. According to a report prepared for the European Commission, EU app developers took in 17.5 billion euros in revenue in 2013. That figure is forecast to increase to 63 billion euros by 2018. That same report predicted that the EU app developer workforce will grow from 1 million to 2.8 million over the same period.
Amazon is another example. It has enabled many European SMEs to sell their goods on the internet, including cross-border and even across the Atlantic, for the first time. In the past year businesses selling on Amazon’s EU websites earned a record 2.8 billion euros in revenue from exports within the EU. This is in addition to the billions of euros EU sellers earned from purchases made by Amazon customers living in their home countries and outside of Europe. Meanwhile, Facebook recently announced that its social network generated 44 billion euros and enabled 783,000 jobs in Europe in 2014. At the same time, thousands of micro-entrepreneurs have launched their own YouTube channels that are now making six-figures annually.
These examples show that innovation has no borders.
Let me close with a quote from Thomas Edison, one of America’s most famous entrepreneurs – the inventor of the movie camera and the lightbulb to name just two. He once said: “I haven’t failed. I just found 10,000 ways that don’t work.”
You are here today because you’ve already found a way that works. You in this room and others like you have the opportunity and the responsibility to push for the policies that will allow you to innovate and deliver the growth and competitiveness that you want for own companies and upon which Europe’s future depends.