Europe News

Making profit from data is Europe's next big challenge in tech

Key Points
  • The EU's new head of data and industry policy wants these European firms to be better equipped to stand up to their American and Chinese counterparts.
  • The plan in Brussels is to help EU companies to better capitalize on the electronic information they generate, according to the Financial Times
Thierry Breton, France's European Union commissioner for internal market and consumer protection, industry, research and energy.
JOHN THYS

The European Union has a new aim: figuring out how home-grown companies in the region can make money from data.

The EU is drawing up plans to boost the competitiveness of European companies amid the hegemony of U.S. and Chinese firms. Europe has struggled to develop, support and even host digital companies over the past few years. For example, Spotify, the Swedish music streaming service, threatened in 2016 to move to the United States.

However, the EU's new head of data and industry policy wants these European firms to be better equipped to stand up to their American and Chinese counterparts.

"I will make sure we will not miss the new wave of industrial data," Thierry Breton, the European commissioner for the internal market, told the Financial Times Tuesday.

"The most important thing is to evaluate how we create data … and how we will be able to use this data," Breton also said. The plan in Brussels is to help EU companies better capitalize on the electronic information they generate, according to the newspaper. The exact scope of the data which is being targeted is yet to be defined.

The European Commission, the EU's executive arm, has often criticized the dominance of big tech players and how they use data. In 2018, the European Union approved a sweeping data privacy law known as the General Data Protection Rule (GDPR), aimed at giving users' a bigger say over their own data.

Margrethe Vestager, the EU's chief for competition policy, said in September that there should be stronger rules on how companies collect and use information. In December, Vestager opened preliminary investigations into Google and Facebook's data practices, assessing whether the two U.S. tech firms are complying with its rules in the region.

No more 'openly available' data for US tech giants

Any new data initiatives in the EU would likely become a hurdle for tech giants such as Google, Facebook and Microsoft.

"It means that the time of openly available and easily reusable data is over," Andrea Renda, senior research fellow at the Brussels-based think tank CEPS, told CNBC regarding the impact of the European plans on U.S. companies.

"It may also mean new obligations to store data in Europe, and more obstacles in their European operations, including renewed competition from European cloud operators and even chipmakers," Renda also said via email.

U.S. tech giants face a range of issues on the continent. Apart from how they use and store data, they are also under scrutiny for how much tax they pay and how they operate in the 28-country region. Two of the biggest cases in the last five years included fining Google for disrespecting competition rules and asking Ireland to collect unpaid taxes from Apple.

There are also plans in certain countries to impose a so-called digital tax. France and Italy have actually gone ahead with their own tax for digital companies, while other countries are still in discussions. Higher taxes also mean less margins for these companies in the region.

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