26 Feb 2023

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New technology industry identifies key digital challenges for the Swedish EU presidency

Open dialogue, concern for the competitiveness of CEE economies, staff shortages, the risk of over-regulating the market, as well as new EU regulations - the AI Act and the Data Act - which could potentially impose a heavy financial burden on SMEs. These are, according to European new technology industry organizations, the most important digital challenges facing Sweden, which took over the Presidency of the Council of the European Union at the beginning of the year.

These issues were discussed at a meeting of industry organizations’ representatives from the Czech Republic, Sweden, as well as Poland organized on Thursday (February 16) by the Digital Poland Association as part of the CEE Digital Coalition project, bringing together digital industries from the countries of Central Eastern Europe. The experts jointly outlined the goals and challenges of the EU's digital agenda for the Swedish government, which has been leading the presidency of the Council of the European Union since January.

Open dialogue with business
Summing up the second half of 2022, the meeting's participants agreed that the Czech presidency had been an undoubted success, and that the next countries in the position, including Sweden, should follow its steps in terms of openness to consult regulations and being accessible to stakeholders. In their view, one of the main challenges for the new presidency is to create a space for broad discussion with all stakeholders. According to the participants of the meeting, open dialogue must be an essential part of the creation of any regulation affecting the EU's digital single market. – Today, the creation of regulations in the European Union is often accompanied by haste. We need to make Europe the place for doing business freely, allowing innovation and competition. This is particularly important for the CEE countries - pointed out Michał Kanownik, President of the Digital Poland Association, organizer of the meeting.

Disturbing regulatory proposals
According to representatives of digital industry organizations from the Czech Republic, Poland and Sweden, a key task for the Swedish presidency is also to foster competitiveness in the digital single market. In their opinion, some of the legislation that the European Commission and the European Parliament are working on could not only undermine these efforts, but also restrict citizens' freedoms online. One of these is upcoming regulation of online political advertising. The regulation is intended to protect EU citizens from disinformation, manipulation, and interference in their informed choices by affecting the possibility of paid political advertising and limiting the profiling of its audience groups, but experts point out the worrying direction taken in the course of the EU's work. – Caution should be taken in this matter, as the provisions are far-reaching and at times risky. The regulation could cover not only paid materials, but all politically oriented content, including social media posts of citizens regarding social or environmental issues, for example. Thus, we risk significantly restricting freedom of expression online – Michał Kanownik said. The industry is also concerned about the planned proposal to implement a new EU network fee supposed to fuel development and maintenance of telecommunications infrastructure. European telecoms are calling for online service providers, such as streaming platforms, to provide them with additional funds for this purpose – Such an idea was already rejected a decade ago, as the proposed fee could not only lead to higher costs for consumers and reduce service availability and quality, but it also contradicts the principle of net neutrality – Michal Kanownik pointed out.

European cloud and cybersecurity
Appropriate regulation of cloud services is also a challenge for the Swedish presidency, digital industry representatives said. In their view, users should be able to choose from a number of providers of these services, as they may have different needs in this regard, and regulations should not stand in the way of fair competition. Network security issues may prove to be a significant obstacle ahead of the EU. As experts have pointed out, there is a shortage of nearly 200,000 cybersecurity specialists in Europe. According to representatives of the digital industry, the solution to this problem could be cross-sectoral exchange of best practices and information, as well as recognition of industry certifications. – It is important to promote cybersecurity solutions and the companies developing them in the EU, both globally and to European consumers who can benefit from them. Central and Eastern Europe is home to a thriving cybersecurity industry – noted Michał Kanownik.

Regulating artificial intelligence and data transfer
The experts also stressed that meeting the requirements introduced by the AI Act and Data Act currently drafted in Brussels, may prove to be a huge challenge for SMEs operating in the EU. These laws will regulate, among other things, who can use data generated in the EU, to what extent and in what way. Acts are bound to set some restrictions on the use of AI solutions and will impose appropriate reporting obligations on AI activity. They will also affect the possibilities for international data transfer. According to analysis, small and medium-sized companies engaged in AI development could incur as much as €300,000 additional costs of adapting to the new regulations. Such a huge impact on SMEs could discourage them and extinguish their enthusiasm for the sector's development, which is why, as digital industry representatives stressed, discussion of the AI Act must be accompanied by a thorough assessment of the impact of these regulations.

The meeting was attended by representatives of SPCR (Czech Republic), AAVIT (Czech Republic), Tekinikforetagen (Sweden), the Digital Poland Association and Digital Europe. The conclusions of the debate will be sent to representatives of the Swedish government, the European Commission and MEPs.