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European Issue n°652

Digital Sovereignty: for a Schuman Data Plan

Digital Sovereignty: for a Schuman Data Plan
16/01/2023

On 9 January, the European Commission launched the first cooperation and monitoring cycle for the achievement of the European Union's digital decade by 2030. If, in the digital field, Europe faces issues of sovereignty, it is because it has left the sector open for over twenty years to the American Tech giants, who have imposed a game whose rules that have never been understood here. Either because these rules were inaccessible to the European Union (Moore and Metcalfe laws), or because we accepted that there were no rules of the game (code is law).

Substituting our laws for digital laws



It all started with Moore's Law (the technological capacity of microprocessors doubles every two years), which explains the American technological lead. They understood the potential of this law for the computer market and invested massively, making it almost impossible for Europe to catch up. Later, in the 2000s, Metcalfe's law came into play (the value of a network is equal to the square of its number of users), which led to Web 2.0 and the birth of giant platforms attracting internet users to their networks to monetise their data. Since Europe is a heterogeneous market, Europeans have unfortunately not been able to benefit from network effects like the Americans and the Chinese who, because of their domestic size, have been able to build global communities (Facebook, YouTube, TikTok, etc.).

Unable to compete with these two digital laws, Europe is finally waking up and has decided to impose the only law it can control: that of the States. By avoiding the "code is law" trap into which Europeans have collectively fallen, it is reverting to a "state is law" model, which is admittedly less disruptive, but which has proved its worth on our old continent and elsewhere. As the economic asymmetry between Americans and Europeans is constantly amplified by legal asynchronicity, current regulations such as the Digital Services Act (DSA), the Digital Markets Act (DMA) and the Data Governance Act (DGA) are marking the end of the era of "laissez-faire" and of voluntary digital servitude. This is what European Commissioner Thierry Breton sums up so well in the formula "Everything that is forbidden in the physical world will also be forbidden in the online world".

Preference for the Europeanisation of digital technology to the "Siliconization" of Europe



By opting for regulation, the European Union is not only making a defensive choice to protect its interests (fight against abuse of rights, power and dominant position), it is also opting for an offensive strategy aimed at promoting its values via the extra-territoriality of its law. Europe exports its fundamental values through regulations such as the General Data Protection Regulation (GDPR) or the Data Governance Act (DGA). It therefore aiming to Europeanise the digital world, i.e. to impose its humanist values via the creation of a "digital Enlightenment" as an alternative model to the libertarian vision in the West and the authoritarian one in the East.

This third digital path is one of decentralisation and cooperation. The fantasy of creating a European "GAFAM" model has to stop. Because without being able to take full advantage of the Moore and Metcalfe laws, it is impossible to achieve this. On the contrary, advantage has to be taken of the era of the decentralised Web (Web 3) to capitalise on differences and devise specific rules of the game. The "Big Techs" certainly have an enormous capital and technological lead, but they do not have Europe's industrial culture or the knowledge of European businesses. Europe is a world leader in many sectors and can count on its collective intelligence to create new business models and new practices, provided that cooperation occurs, because no European leader is a match for the digital giants when it comes to technological innovation.

Europe has proved in the recent past that it was not doomed to suffer the rules of others, but that it could impose its own by proposing new standards. A point in the digital field has now been reached that is comparable to that of the telecoms in the early 1990s, when Europe chose to cooperate by investing in common standards (GSM) to confront the Motorola monopoly. This not only helped curb American domination, but it also enabled the European telecom industry to take the lead worldwide by becoming the de facto reference standard for telephony!

Europeans must therefore fully embark on the strategic work of standards, by seizing the opportunity offered by the Data Governance Regulation (DGA) and by becoming fully involved in its operationalisation via Gaia-X, the European meta-cloud, which aims to offer an alternative to the solutions offered by Google, Amazon and Microsoft. While European digital players have not been able to connect the eight billion people on the planet, Europe can connect businesses and make data sharing between them its own digital adventure.

It would thus prevent the GAFAMs, after the Internet users, from trapping companies in their closed ecosystems via their hyperscale cloud offers[1]. This is why data sharing is key. Indeed, data is either shared between peers or centralised by large foreign platforms.

Europe's fate lies in its own hands.

Sovereignty, the new Franco-German frontier



However, to control its shared future, Europe must regain its ability to impose its values, its interests and, above all, its laws. In other words, it must regain its sovereignty. To do this, it must accept that digital sovereignty is an ideal, an imaginary course guiding its choices, but not a destination. No country has achieved full technological sovereignty, not even the Americans, as evidenced, for example, by their dependence on Taiwan for semiconductors. The political quest for sovereignty thus translates into a goal of strategic autonomy, which is gauged by levels of agreed dependencies and chosen interdependencies. Like energy sovereignty, where a state chooses not to be totally dependent on a single supplier country or energy, digital sovereignty also seeks to have control of its dependencies.

But the differences in vision on this subject between France and Germany are increasingly visible and are leading to a dangerous line of fracture for the unity of the European Union. France defines digital sovereignty in terms of infrastructure, while the Germans prefer to talk about data sovereignty (Datenhoheit). For Germany, sovereignty is a barrier to the export of its goods, whereas France thinks it is a protective barrier for its values. In France, this dependence on digital infrastructures is seen as a threat to our industries, whereas in Germany the choice of American data centres (hyperscalers such as Amazon-AWS, Microsoft-Azure, Google-Cloud) is seen as a guarantee of being able to penetrate the American market.

Strategic autonomy, as it is understood in Paris, is a resolve to be free of any dependence on external powers, even if they are friendly. It is a rather Gaullist vision according to which, in international relations, alliance does not prevent autonomy. In Berlin, it is interpreted essentially from the point of view of commercial relations, favouring the liberal approach according to which industrial sovereignty, dear to the powerful Rhineland lobbies, requires a contractual alliance with external markets. However, these different positions on digital issues - as on energy and defence - can coexist if the Franco-German bedrock of trust on which the European Union is based is maintained.

Trust, the cement of European strategic autonomy



Sovereignty must be able to rely on an ecosystem of trust that allows members to be anchored in a community of values or interests so that they can impose their choices on those who are not. This capital of trust that the European Union has patiently built over the decades must now be transposed to the digital world. The world needs an alternative between the two technological imperialisms of the United States and China, because countries must have the possibility of adhering to universal values compatible with multilateralism.

This control of dependencies can take several forms: either by 'doing it yourself', in the very rare cases of total independence, or rather by 'doing it with others', in a framework of controlled trust. And if possible, by "doing for others", so as to make oneself indispensable and thus be able to dissuade anyone from threatening the balance of trust by controlling a component that is essential to everyone's sovereignty: Taiwan, Korea and Japan are excellent examples of this "soft dissuasion".

Managing dependencies therefore means choosing interdependencies and nurturing its corollary: indispensability. To protect this delicate balance, the quest for sovereignty consists in building and securing a "trusted ecosystem" based on technological mastery of a common material and immaterial infrastructure, a secure regulatory framework, a capacity to defend oneself and, of course, an informed choice of reliable and complementary stakeholders. Partners who share the same values of respect for data, openness and transparency, to the point of assuming voluntary dependencies with them to compensate for any weaknesses.

Short of guaranteeing a fully sovereign (self-sufficient) technological value chain, the major challenge of this balanced governance will be to safeguard an international 'chain or network of trust'. A mode of governance that the French and Germans must reinvent and that will allow composition on certain strata, the building of international technological alliances, contracting with external solutions in complete security, but never being disproportionately affected by these external influences.

Sovereignty without trust means the unilateral use of force, the undermining of multilateral trade and thus the hindering of prosperity as defined in the European Union. The whole art of sovereignty consists in choosing on whom and to what extent one wishes to depend, i.e. in whom one has sufficient confidence. It is no coincidence that the notion of the 'trusted digital' is taking shape in Europe, a continent where free movement is the basis of our economic and political life, a place where more than anywhere else prosperity is inseparable from the notion of exchange. Between China, which advocates self-sufficiency, and the United States, which assumes a form of interference through the extraterritoriality of American law, the European Union must invent a form of sovereignty that is synonymous neither with protectionism nor feudalism, but rather with the definition of a shared, open and multiparty strategic autonomy, made up of accepted and reciprocal dependencies with trusted partners.

Creating a trusted infrastructure to contain and capture the Big Tech market



According to the Digital New Deal, DigitalTrust comprises three strata: Cloud, Data and Artificial Intelligence (AI), plus cybersecurity to protect this space of trust generated by regulation. The problem is that this ecosystem only relies on its own infrastructure. Indeed, digital projects, especially data spaces under construction, have common data sharing software infrastructure requirements (management of consents, identitý, legal and business models, etc.). The inabilitý of European players to come together and pool their efforts favours the monopolisation of the markets by the large American cloud providers. Yet all the necessary skills exist in Europe, likewise the means to cover the entire value chain. The European Union must not be content to become a continent of start-ups. The more it develops, the more it paradoxically amplifies its dependencies, as these start-ups are major consumers of the technical and marketing services offered by Big Tech companies. If this magnificent economic fabric of Tech is to be protected, if the ecosystems are to become truly systemic and if every euro invested in these start-ups is not to benefit only the American giants, Europe must equip itself with a trusted infrastructure.

For this to happen, Europeans must help create an "Infratech": an ecosystem of European players specialising in software, who have joined forces to provide an end-to-end offer for the cloud, data and artificial intelligence. The aim is not to create a super champion, but to succeed in federating a multitude of players - large groups, SMEs, ETIs and talented but isolated start-ups - by bringing them together in a competitive offer. This alternative offer is both a sine qua non for trusted artificial intelligence, a lever for the European data strategy and a Trojan horse for the sovereign cloud in the face of Big Tech.

Firstly, because the challenge of trusted artificial intelligence - i.e. transparent, respectful of values - will be greatly facilitated in cases of use based on trusted data, i.e. governed, certified and protected. This will be a lever of scalability for data sharing and European start-ups. By pooling development efforts via "open source" digital tools governed and enriched by this "multitude" of players, in fact the barriers to enter a market that will otherwise remain monopolised by the American giants will in fact be lowered.

Finally, Infratech is a Trojan horse, because this sovereign and federated service offer could be proposed by European cloud providers (OVH, Outscale, OBS, T-System, etc.), thereby countering the tied offers of the major American cloud providers who lock their customers into an opaque ecosystem, going so far as to apply a free-of-charge logic to prevent the emergence of competition. This layer of interoperability and data sharing would thus avoid being captured in proprietary systems from which client companies cannot easily escape (complex and costly), or even mix with competing services.

There should be no mistake about this. Either investment in this Infratech, which meets the unique vision of strategic autonomy, will be successful, or the infrastructure will be based on solutions provided by the American cloud giants. This is the condition for Europe's digital sovereignty, if the general interest data (health, education, etc.) and strategic data (business) are not to be enriched by solutions that compete with European interests.

In real terms, this means - for the equivalent of the cost of building one or two kilometres of rail - financing the intangible infrastructure of the 21st century economy, a major legacy for Europe!

Data strategy, a genuine Schuman Digital Plan



It is not too late, because bodies such as Gaia-X are there so that Europeans can create this trusted digital infrastructure, the foundation of a common data market. However, if this opportunity is not to be missed, it is vital to realise that the European Union is at an important moment in its history: the European Commission's European Data Strategy truly is a "Schuman Data Plan". Only by taking this path can the European Union open up a third digital way. For this to happen, however, France and Germany must speak with one voice so that they follow the same path.
[1] Hyperscale refers to the combination of hardware components and facilities that allow a computing environment to scale up to include several thousand servers; hyperscale is about the massive expansion of bulk computing capabilities, typically for big data or cloud computing.
Publishing Director: Pascale JOANNIN
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The author
Arno Pons
General Delegate, Digital New Deal
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