Europe is at an important juncture regarding digital innovation: the path chosen will determine the ability of European citizens to realize fully the potential of the myriad new technologies available to them, both to create new, innovative businesses or to simplify their own lives.
When you think about the history of the transatlantic relationship, it’s clear that one of the driving forces of our respective economies has been innovation and the spread of ideas between the United States 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.
The U.S. government supports entrepreneurship and innovation in Europe (and it’s something I take a personal interest in) because a growing, innovative Europe is in the interest of the United States. We are following with great interest the Juncker Commission’s proposal on the Digital Single Market and recent green paper on the Capital Markets Union, which are focused on how to attract and unleash venture capital and other forms of entrepreneurial finance to help innovative young firms scale-up and grow in the digital economy.
Cross-border data flows between the United States and Europe, at about 15 terabits per second, are the highest in the world – 50 percent higher than the data flows between the United States 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.
In addition to being each other’s largest trading partners for digitally deliverable services, the United States 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.
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. This message was reiterated by Secretary of Commerce Penny Pritzker to Vice President Ansip and Commissioner Oettinger during her July visit to Brussels. That kind of reform would create the proper conditions for a robust transatlantic digital economy in which EU and U.S. businesses will prosper and innovators will 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.
To do so, small, innovative firms need access to capital to scale-up. I recently hosted an event in May 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 United States 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.
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. We hope those conclusions can play a constructive role in policy development going forward. It is an area where I will remain focused throughout my time as U.S. Ambassador to the EU.
Innovation has no borders. Policymakers have the opportunity and the responsibility to develop policies that allow entrepreneurs to innovate and deliver the growth and competitiveness upon which Europe’s future depends.